5 Interesting Facts About Invoice Discounting, How Does It Benefit Business Owners?

Business owners have to deal with all kinds of complexities, including delays and cash flow constraints. However, there are financial facilities that can help them out in such scenarios. One such solution is invoice discounting! This unique facility is also termed “invoice finance” and can be an excellent tool for business owners to access additional cash. Let’s break down the most interesting facts about this tool and its benefits for businesses!

Notable Facts about Invoice Discounting

These are some of the most exciting aspects of this convenient financing tool:

• Quick Availability of Cash: Invoice discounting helps you borrow up to 95% of all raised invoices. If you raise an invoice to a buyer but you are yet to receive the payment, you can still get quick access to cash. A top financial broker can process invoice discounting loans with a pre-approval period of just 24-72 hours. Hence, invoice discounting can help you unlock cash reserves despite payment delays.
• No Need for Collaterals: Invoice discounting is an excellent way to get a big loan facility without putting any real estate security as a collateral. This facility does not need any asset-based collaterals. The invoices act as relevant securities.
• Fuel for Growth: Invoice discounting helps business owners boost their businesses by infusing some much-needed cash. Even when customers are late in clearing their bills, this excellent facility can help businesses stay on top of their expenditures.
• Limited Applicability of Interest: A small interest amount is charged for this facility. The interest applies only to the sum borrowed for the outstanding period. The interest rates are also affordable, starting from around 4.95% per annum.
• Simple Repayments: These short-term loans are very easy to repay. You can repay the amount as soon as your customers clear your invoices. The settlement only takes about 60 to 90 days. This hassle-free system is excellent for helping your business manage short-term cash constraints. 

How Does it Help Business Owners?

Invoice discounting can offer multiple advantages to business owners. Some of them are:

• Quick and Convenient Way to Clear Payments: Business owners can easily use this facility for making various payments. They can pay wages to their employees, buy inventory, or pay their creditors. It is a convenient way to manage expenses and minimise the financial burden.
• No Impact on Leverage: This short-term loan has no impact on the company’s overall financial standing. The leverage ratio of the business firm remains unaffected.
• Flexible Option: The business owners can pay interest on the portion of funds borrowed. Moreover, if customers clear invoices fast, business owners can repay with very little interest being applicable.
• No Additional Security: No other asset is necessary for invoice financing. This aspect ensures that business owners can avail themselves of short-term loans without risking their existing assets.

If you are a business owner who has an ABN/ACN and unpaid invoices raised against other Australian companies, you can contact a finance broker for invoice financing. Their trustworthy services for brokering financial facilities can help you combat capital depletion with ease.