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Waddle’s Invoice Finance Is Not Invoice Factoring, Here’s Why

Leigh DunsfordLeigh Dunsford

We get asked every day how Waddle’s Invoice Finance compares to Invoice Factoring

I was speaking with one our new partners in W.A last week (true story) and it took a little time for him to have that “light bulb” moment when he realised that Waddle doesn’t work like invoice factoring at all.

Where it does draw similarities is the fact that funding is based on the value of the outstanding invoices in a business. We call it invoice finance for ease of understanding however, the technical term is an asset-based line of credit where the asset is the invoices. Each time an invoice is raised it creates a new asset that can form part of the “asset base” that you can draw funds against.

Technically invoice factoring involves the financing arrangement being disclosed to your customers by notification on invoices and assignment letters being sent out to each customer informing them of the relationship. Each individual invoice is “factored” and is then “assigned” to the lender who is now free to perform collection calls and chase down debts independent of your business.

Waddle has none of these characteristics and effectively embeds itself as a silent financing partner between your accounting software and customer payments.

If you understand how a business overdraft works that is secured against real-estate with drawdowns, repayments and interest charges then guess what? You now understand exactly how Waddle works with one very large difference, the asset is not property, it’s invoices. Just like a property asset you offer for security has equity to borrow against, your invoices are no different. Each time you raise one it creates an asset just like equity that can be borrowed against.

If you have on-going invoicing, these can all form part of a floating asset that moves up and down as invoices are raised and repaid.

How do we assess your invoicing in real-time?

The most amazing thing to happen to businesses is cloud accounting. With your data being stored in the cloud it allows lenders like us to link up to this data. As you raise new invoices or reconcile payments this data can be synchronised with your Waddle account allowing for a seamless way to borrow funds against this often underutilised asset of the business.

That was a very brief overview, like to know more? Ask me directly: leigh@waddle.com.au

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I am one of Waddle's Co-founders.