Invoice Factoring has been a staple financing option for companies with slower cash conversion cycles, but there’s a catch.
Though it seems quick and painless, factoring companies often cut deep into profits, taking up to 20% of total sales. Before you factor your invoices, consider the true cost, avoiding shiny headline rates.
Selling goods or services means you’ll end up providing terms if you intend on growing.
Unless you’re cashed up or have the modern invoice financing alternative in place, you’ll need to bridge shortfalls between paying wages and suppliers.
The term invoice or receivables finance seems to instantly invoke thoughts of factoring in the minds of many business owners and finance directors.
Factoring is one of the oldest forms of commercial finance that probably explains this thinking though in more recent times, new technology based lenders are offering very competitive invoice backed business loan alternatives. These loans differ in many ways from the traditional factoring arrangement and importantly for businesses, can result in some significant cost savings though have other differing factors to be considered before deciding what works best for your business.
Invoice Finance and invoice factoring are two financing terms which are thrown around, confused and widely misused by many lenders in the marketplace.
Important: Waddle' cloud accounting add-on is a unique funding program in Australia and even though it falls under the category of invoice financing, it vastly differs to "traditional" invoice financing products on offer in Australia from banks or non-bank providers.
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.