Invoice finance is not just for big business anymore

Posted by Team Waddle on 23-Jan-2019 09:00:00

Big corporates have been using invoice finance for decades. Now modern SMEs can also revel in its benefits.

Big corporates have been using invoice finance for decades. Now modern SMEs can also revel in its benefits.

So, what exactly is invoice finance?

Also known as receivables finance or invoice discounting, it is a common business financing tool that can be used if you invoice customers on credit terms. It allows you to access funding today, rather than waiting 30, 60 or even 90 days.

What can be confusing is that it can get mixed up with other similar forms of funding like factoring. It can also take a few different forms depending on the lender you're speaking with. Banks generally only offer invoice financing to large businesses with turnover in excess of 5 million dollars and significant assets, who are showing profits.

SEE ALSO: Invoice Finance vs. Factoring: The Devil’s In The Detail

The evolution of receivables finance

Invoice finance has gone through a significant evolutionary change. With more businesses using cloud accounting platforms such as Xero and MYOB, innovative lenders like Waddle have developed financing products that can connect to your software online and automate the entire lending process. With just a few clicks you can connect your accounts, obtain a finance offer and be up and running within a day, getting on-going access to new funding as new invoices are raised and paid.

What it isn’t - factoring!

People confuse it with factoring simply because they both fundamentally base funding on the receivables of a business. Invoice finance has always been more suited to growing or sustainable businesses.

Factoring involves the lender taking over the control of collections of invoices. We call this a "notified" or "disclosed" facility. All customers will be contacted by the factoring company with notices placed on your invoices. Factoring companies finance invoice-by-invoice, meaning that each single one is treated as a single asset, with a copy of the invoice and supporting paperwork such as proof of delivery required to be sent each time funding is requested. Factoring tends to have a bit of a bad reputation and who wants their lender contacting their customers and interfering with those precious relationships.

It is simply borrowing against invoices

Invoice finance is simply how it sounds. The loan company will look at your receivable ledger and grant you a credit line, without any disclosure to customers. Traditionally, businesses are required to undergo audits weekly, monthly or quarterly which involves handing over company documents, invoices and analysis on trading patterns and cash flow movements. This old process is administratively heavy and cumbersome – fortunately things have moved on. 

Automate – and focus on your business

Modern businesses using cloud accounting can now take advantage of data automation. Innovative lenders (like us!) have changed the landscape, removing the admin involved in qualifying and operating these facilities.

Waddle's integration with cloud accountancy platforms, such as Xero and MYOB makes invoice finance a breeze.


For the business owner this means no disruption to their operation and no audits. Once a business creates new invoices these are synced directly to their Waddle account and the funds can be instantly to be drawn down. Reconciliation, usually a tedious and time-consuming process is a breeze as well, with data passed back from Waddle to your accountancy platform, saving you time and allowing you to focus on growing your business.

Inside Waddle

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