Invoice your clients and send us a copy
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Receive the remainder when your customer pays us
Invoice Discounting Australia
Ensuring you have finances to keep your business going, is easy with invoice discounting services from
our team at Key Factors. We have been in business since 1989, and with our reliable invoice discount
finance, we are able to help businesses of all sizes to grow more successfully. A method of invoice
financing, through invoice discounting, you can have access to the money in your accounts receivable
ledger, much faster than if you were to wait for customers to pay, by taking out a short-term loan. To
learn more about invoice discounting,
call our team today on 1300 884 100, and we will be happy to be off assistance.
Is your business struggling with maintaining a steady cash flow? It’s often the case with many new and small to medium size businesses that struggle with regular payments to sustain the running of the business.
Unfortunately, some businesses that find themselves with this challenge don’t have enough transactional history or business equity to get traditional loans. When they do, the loans often have high-interest rates and rigid terms that continue to sink the business’s operations.
Not having enough cash flow doesn’t mean that your business is struggling. In many cases, the business is doing well, but you don’t have enough cash at hand to cater to the running of the business. Most of the money is usually tied up in unpaid invoices.
This is where invoice discounting comes in. It allows you to quickly turn your unpaid invoices into cash and gives you access to the cash the business needs. But like other funding options, you need to comprehensively understand invoice discounting to determine if it is the right financing option for your business. Services we offer include invoice factoring, debtor finance, invoice discounting, invoice financing, selective invoice financing, debt factoring and more!
Instant QuoteNo Hidden Fees
Average monthly accounts receivable
Funds in 4 hours
Up to 80% of invoice value
Fees for the first 14 days
1.4% for the first 14 days & 0.1% per day thereafter for up to 90 days
Benefits of Invoice Discounting
Additional cash flow for business growth
Bridge the gap of slow payments
Working capital for start up companies
Meet operating expenses
Get on top of ATO obligations
Pay wages on time
What Is Invoice Discounting?
With many types of invoice services, it is hard to know where to start. The best way to describe invoice discounting, is to compare it to having an overdraft facility or a string of short-term loans, through your accounts receivable ledger. With invoice discounts finance, your business then has a steady cash flow, and you can release your cash flow in as little as 4 hours, instead of waiting for your customers to pay their invoices. We are different from a bank, because we are not one. Instead, our invoice discounts finance comes with no lock-in contracts, no quarterly audits, no monthly or annual fees, and you only pay for what you have used. It really is that simple.
Invoice discounting is a financing method where businesses use their account receivables to get funds when customers haven’t paid yet or don’t pay on time.
While customers have the option to delay payments, the businesses that provide the goods or services cannot postpone their business operations. Using invoice discounting, firms can obtain funds from unpaid invoices to keep them operational and prevent hiccups that could hamper the business’s market image.
Invoice discounting is an effective funding strategy in providing businesses with cash otherwise stuck with customers outstanding invoices. It’s a simple solution with minimal requirements, which also makes it attractive to startups that don’t have the required transaction history to get traditional funding.
Types of Invoice Discounting
The concept of invoice discounting has been around for thousands of years but has evolved and continues to evolve to cater to the needs of modern businesses. Invoice factoring providers have different offers and different types of invoice discounting to cater to different businesses and market dynamics. It’s up to the business to find the factoring company that offers the discounting services that suit them best.
Selective invoice discounting
This is a financing approach where businesses have the flexibility to choose specific invoices for funding instead of financing their entire sales ledger. With selective financing, the business pick invoices with longer payment terms or higher value and receive immediate cash for those specific invoices.
This way, businesses can address short-term cash flow needs without financing their entire sales portfolio. With this type of invoice discounting, the business has greater control and customisation in managing its cash flow. It is an ideal method for businesses with sporadic or occasional invoicing patterns.
Confidential invoice discounting
Invoice discounting involves your business, your customers and the factoring company. With confidential invoice discounting, businesses can access funds against their outstanding invoices while keeping the arrangement confidential from their customers. Full receivables management remains with the company and the payments are made to an account to which the discounting provider owns and has control over.
This arrangement allows the business to maintain its customer relationships and preserve its own credit control in the process. However, confidential factoring comes with a bank level of approval criteria and ongoing audit review requirements that can be beyond the reach of many small to medium sized businesses.
Disclosed invoice discounting
This is the opposite of confidential invoice discounting. Under this arrangement, the business sells its unpaid invoices to a finance company with the knowledge of its customers.
The business informs its customers about the involvement of the finance company in verification and payment processing. When the customers pay the invoices, the funds go directly to the finance company, which deducts its fees and sends the remaining amount to the business.
This type of discounting allows for a transparent relationship between the business, the finance company and customers. Everyone is aware of the financing arrangement.
Whole turnover invoice discounting
Whole turnover invoice discounting is the opposite of selective invoice discounting. Businesses that get into this arrangement finance all their invoices as soon as they raise them. Under whole turnover invoice discounting, you finance all your invoices within the contract period. This method is ideal for businesses that suffer continuous cash flow challenges and want regular and reliable capital injection to facilitate business operations.
Invoice discounting firms that offer this service also [usually] have other fees attached to the service, like monthly or annual admin fees and an early exit penalty.
Each of the types of invoice discounting highlighted above has its pros and cons. What you choose depends on the needs of your business and the fees you’re comfortable paying. But most importantly, it is to find a good invoice discounting company to work with.
How Does Invoice Discounting Work?
The best way to describe how invoice discounting works is by thinking of it as having an overdraft facility or a series of short-term loans secured on your accounts receivable ledger.
The process begins with your business selling goods or services to its customers as usual and raising invoices for the delivered or completed works to the customers.
Instead of waiting for the customers to pay the invoices, which might take some time, you approach an invoice discounting company that lends you the value of the raised invoices minus a small percentage after verifying that the invoices are genuine and valid.
Why Do Businesses Use Invoice Discounting?
Invoice discounting is a silver bullet for many businesses. Invoice discounting has a high approval rate and low requirements, making it attractive to numerous businesses. Many businesses have come to rely on this funding approach for various reasons:
Fix cash flow shortages
Cash flow challenges are common among most businesses including new and small businesses. Although these businesses report growth and an increase in their operations, they don’t have the luxury of account balances or cash reserves to buffer their operations as they wait for clients to pay invoices. As such, they often find themselves treading a fine line as they attempt to pay the bills whilst maintaining supply of their goods or services to customers.
Invoice discounting provides an effective and timely solution to these challenges. It’s particularly useful for small and new businesses that might not qualify for conventional loans and might not have the luxury of time to wait for the lengthy loan process approval times that come with those loans.
Generate working capital
Historically, businesses turned to traditional bank loans to generate working capital. However, these have steep requirements and documentation that most small to medium size businesses don’t have. Also, the loans have high interest rates that only serve to add to the business’s running costs.
With invoice discounting, the business can quickly free up cash from its unpaid invoices to continue operations without taking up additional debt. Using this approach, the business can quickly access funds for operations and expansions and doesn’t have to worry about paying back hefty interest rates.
Payroll crunches are common for many businesses. The problem is pertinent and recurring in some, while it is temporary in others. One of the reasons a business might find itself unable to make payroll is when they have too many unpaid invoices or had a sudden surge in sales, and the invoices haven’t been paid as yet.
As long as the business has accounts receivable, it can easily fix the situation by opting for invoice discounting. Most companies will have the money in your account within a day or two, whilst Key Factors, will usually credit your account within 4 hours.
The quick turnaround of invoice financing and fast approval process ensures the business can make payroll each time as it improves its cash flow situation.
When you want to take on more business, you need to consider how you will afford the growth. Whether it’s an opportunity from a new client or part of a gradual and strategic process, your business must have the finances to pay for the expansion.
If it is a substantial job from a client, by leveraging off the existing accounts receivables, having access to cash makes it easier to deliver on the project without plunging your business into debt.
Invoice Discounting Benefits
The demand for invoice discounting services has been growing with the number of companies offering invoice factoring because of the many benefits this type of funding offers businesses. Some of the advantages of invoice discounting include;
Invoice discounting is one of the fastest ways to get funding for a business. It has the quickest approval, and once a facility is in place, we can get the money credited to your account in hours. If you’re struggling for cash and time is of the essence, there’s no better method to get funding than invoice discounting.
Increased cash flow
Invoice discounting is quick and streamlined and maintains a steady cash flow stream as long as the business offers credit terms on its sales. It’s a great way for new and small businesses to improve their cash flow and keep their businesses up and running.
Release locked cash
Invoice discounting allows you to free up money tied up in unpaid invoices, turning your account receivables into fast cash. You can use your money to increase inventory or as a buffer to fix your cash flow challenges.
Flexibility with funding
When applying for a loan, the bank always wants to find out what you need the money for and, in some cases, won’t fund you if they believe the reason is invalid. Invoice discounting gives you full autonomy over how you spend the money. From improving cash flow, making payroll, and even paying off ATO debts, you can do anything you want for your business with the money you get from the factoring company.
You don’t need to use your property, other significant collateral, when using invoice discounting. You don’t have to leverage any other part of your business. Just the commercial invoices. You maintain the power to borrow and leverage such assets when you need more substantial loans or preserve them if you don’t want them tied up in debt.
Why We Are The Leading Invoice Discounting Company In Australia?
Whilst invoice discounting is a valuable tool for businesses looking for fast, stress-free cash, it only works when the business takes the time to find and align itself with the right company. Key Factors is one of the leading factoring companies in Australia, with a history spanning over 30 years of helping businesses financially.
As a leader in the factoring industry, we have developed long-lasting relationships with the businesses we work with. We have used their feedback to provide effective and efficient factoring services with the business in mind. Here’s why many businesses love working with us and why we think you will also want to work with us.
We are transparent
Everything about us is transparent and upfront, including our fees. We charge a percentage-based fee, which you can calculate based on the invoice value you want to finance with us. We don’t have any admin fees or early exit penalties.
Pay as you use
You only pay for the invoices you want to finance with us. There is no monthly or annual fee or early exit penalty. Everything is flexible. You can finance as many invoices as you want and stop anytime.
Most factoring companies take about two days to credit funds into the business. From our years of experience, we appreciate how hard-pressed businesses might be to get the money as soon as possible. We’ve simplified and shortened our processes, allowing businesses to receive cash in as quickly as 4 hours.
Key Factors doesn’t use lock-in contracts, quarterly audits or property security in a bid to get businesses to have us finance their invoices long-term. Everything is completely flexible and controlled by you. You decide when and how many invoices to finance. You are not locked in any contracts; you only finance when you want the funds.
There is no requirement to finance all of your invoices. You can finance the number required to cover your business needs.