Business invoice finance in New Zealand is an excellent method for businesses to access short-term funds depending on their current invoice numbers. Invoice financing enables businesses to increase their cash flow at record speeds and increases the duration of time that they hold cash. In addition, it will help businesses pay staff and suppliers earlier than they can when they were to wait on their own money. An invoice factoring solution can also increase customer loyalty because businesses that outsource invoice finance typically provide additional services, such as inbound call centre support, when their existing inbound staff have questions or concerns. If you are looking into invoice factoring, then below are some of the considerations you should keep in mind before deciding which solution is right for your company.
First, determine what your invoice finance options are. One option is to apply invoice discounting to your New Zealand accounts receivable. This involves paying a small fee for an agreed upon amount as processing fees, rather than settling the debt completely. The trade off between settling the debt and accepting a percentage of the outstanding debt is significantly less than applying invoice factoring to all of your accounts. However, the trade off comes with higher interest rates because the company you are dealing with is taking on more risk by taking on invoice discounting.
Another option available to businesses in New Zealand is to apply for an invoice finance rate that is based on a percentage of sales. This option does not include factoring, but instead it applies to the transaction cost of accepting credit card payments and remitting payments to suppliers. Because this type of rate is much higher than a fixed rate, it is usually only suitable for companies who have high annual sales or turnover. Many new businesses will not find this rate attractive when compared with other invoice finance options, and it can be expensive in some cases.
One way companies in New Zealand manage to get commercial invoice financing without having to take out a loan is by taking out an unsecured loan. An unsecured loan is a form of business loan that does not require collateral, which makes it ideal for those who may not be able to qualify for a business loan or those who do not currently own their own property. Business invoice financing usually carries a one to three year term depending on how long you plan to keep your business and how much you sell your invoices for. In order to qualify, you will need to prove that you have enough credit to repay the debt, that your business is trading, and that your customers are able to pay the debt.
For most businesses in New Zealand an unsecured loan is the most common form of business invoice financing available. If you choose to apply for a low rate unsecured loan you will be required to provide documentation such as your business plan and bank statements, but these requirements are minimal and it is not uncommon for your application to be approved. To secure a low rate on your invoice financing, you can consider taking out a low risk business line of credit with a participating financial institution, such as Westpac or BNZ. A Westpac business line of credit is similar to your existing credit cards, with the difference being that you are required to have a minimum balance in order to use your credit.
Commercial invoice factoring allows businesses the ability to quickly obtain funds from a borrower at a significantly reduced rate. Business invoice finance in New Zealand involves a business providing funds to an invoice factoring company, which in turn offers funds to a business requesting funds. Factoring is an excellent way to raise necessary funds for a particular project or ongoing operation. If you have excess funds sitting around you can ask a factoring company to give you cash to invest in equipment or rent new premises. For businesses that are not generating the amount of cash they may need, invoice financing can provide the means to access cash and pay for daily expenses.
Business invoice finance in New Zealand has several benefits over traditional loan or equity financing. Firstly, it allows you to tap into the funding you need when it is needed most, not just when your business is performing well enough to generate an income. Business invoice factoring also provides the peace of mind that comes from knowing that your business will be able to meet its obligations when they are due. Lastly, by allowing a third party to assume responsibility for the repayment of invoices you can increase the liquidity of your company. This means that the less liquid cash your business has, the higher your company’s ability to raise funds. This is beneficial to entrepreneurs who want to ensure that they have enough funding available to grow their business without relying on outside financing sources.
When applying for a business invoice finance in New Zealand through a participating financial institution or bank, you will be subject to a credit check and thorough documentation of your financial records. In many cases you will also be required to provide substantiation of your business income and expenses. However, by using a reputable and properly licensed private money lender, you can ensure that the loan is granted when it is needed most and that you get the best possible terms and interest rate. Applying for and receiving invoice finance online is quick and easy. You will need to provide your business and personal information in order to complete your application and begin receiving payments as soon as your application is approved. Invoice Factoring Solutions can help your business meet its invoice obligations and grow quickly by providing you with the right financing options.