There has been a spike among businesses availing of invoice financing, a financing option with a revolving line of credit against unpaid invoices, as a way to improve business cashflow.
One invoice financing provider, OptiPay, has reported that it provided over $25 million in financing since the start of this year, a near ten-fold increase in new client take-ons.
“We’ve had a huge spike in broker-driven enquiries as access to capital becomes more difficult for many businesses,” OptiPay CEO Angus Sedgwick said. “Banks are becoming more risk-averse in the current climate and it’s forcing many businesses to look at alternatives to maintaining their cashflow.”
OptiPay’s disclosure comes as rising interest rates, increased cost of living, and a growing number of businesses finding themselves in default of their bank loans has led to many businesses turning to alternative lending options.
“The majority of new enquiries have come from the agriculture, transport and logistics, mining services and manufacturing,” Sedgwick said. “Many SMEs are increasingly turning to brokers to facilitate their lending as they juggle unpaid tax debts, supply chain issues and rising inflation.
Sedgwick explained that any business that invoices another business for goods or services on credit terms is a good candidate for an invoice financing facility, with businesses typically able to access up to 90 per cent of their sales revenue within 24 hours of issuing their invoice. Unlike more traditional business loans there are no ongoing repayments back to the financier using this form of borrowing as they are repaid when the debtor makes payment of the invoice/s. The fee paid to the financier usually ranges from one per cent up to three per cent of the invoice value.”
“Cashflow is everything for a business and in the current economic times it’s even more important it’s maintained,” Sedgwick concluded.
