Invoice Finance FAQs Paul
Invoice Finance FAQs
These invoice finance FAQ’s represent a cross section of the most common queries we receive from our customers. If you have a question which has not been answered please call us on 1300 430 076 or contact us using the form on the left. One of our helpful and friendly staff will be very happy to assist you.
It is a very simple transaction which allows you to turn a sales invoice into immediate cash. You don’t have to wait 30 or 60 days to get working capital into your business. We’ll do the waiting for you? We get our money back when the customer pays.
It normally takes between three and five days from application to approval. Once all documents are completed and provided you can have money in your account within 24 hours. For existing clients that transfer can occur within 2 hours.
Typically, we will advance you up to 80% of the invoice amount. That’s a maximum. You can sometimes reduce your costs by taking less. When the customer pays we transfer the remaining 20% into your account less our fee.
We use a sliding scale depending on how long it takes for the invoice to be paid. The amount of the invoice and the size of the advance can sometimes influence the calculation. Typically, our fee is 5 percent of the invoice amount, however it can be as little as 3 percent.
An invoice finance fee is not an annualized interest rate. Once an invoice is settled – usually within 30 days – there is nothing left to be paid. It’s a bit like saying that a 2% discount you offer a customer for paying early – say 10 days – is actually costing you 72% on an annualized basis. It may be so theoretically, but in practice it’s a nonsense.
Their are two reasons a customer does not pay. The first is because the business becomes insolvent. We will often protect ourselves from loss by insuring our funds. This attracts a further 1.o% of the invoice value. The second reason is generally because of a dispute over the product or service. That being the case, the responsibility falls to you. If payment is not forthcoming we will ask you to provide us with an exchange invoice or repay our funds from your reserves.
Insurance is preferable but ultimately that decision rests with us. We often require insurance to protect ourselves and our clients. An exception applies to Government agencies and most blue chip companies.