Non-Bank Financing Options to Boost Your Business Cash Flow and Growth

November 1st, 2021

Non-Bank Financing Options to Boost Your Business Cash Flow and Growth

 Did you know it’s becoming harder to secure small business finance from banks on terms that suit your business needs? Only half of the SMEs that applied for funding in the last six months succeeded in obtaining the full amount they needed. There are several reasons for this trend, including:

  • banks viewing small business finance as being more risky than large business finance. 
  • banks having strict lending criteria and longer approval times than non-bank lenders.
  • economic uncertainty created by the COVID-19 pandemic and the associated impact on business activity and bank lending approvals. 

This financing difficulty has seen a significant rise in demand for non-bank financing options by small to medium-sized businesses in Australia over the past decade. And the good news is, there are plenty of non-bank financing options available!

Three popular non-bank financing alternatives are:

  1. invoice finance
  2. trade finance
  3. equipment finance.

These finance options have the flexibility to support businesses of all shapes and sizes. Let’s look at each of these options in turn.

Invoice Finance

Invoice Finance, also known as Debtor Finance, refers to borrowing funds against a business’ accounts receivable to support a positive cash flow or solve cash flow problems.

Getting approved for Invoice Finance can be quick and easy. Once you’re approved, you can access cash flow funding for your business the same or next business day.

Because you are borrowing against your accounts receivable, your capacity to borrow increases as your amount of outstanding invoices grows.

Invoice Finance providers typically advance up to 80% of the value of your invoices ahead of client payment, with the 20% paid to you upon settlement, minus fees.

Modern Invoice Financing providers can also integrate with your accounting software, saving you significant time that can be used in other areas of your business. For example: Earlypay has great integrations with the accounting platforms like Xero and MYOB, that make the lives of business owners, their accountants and bookkeepers easier.

Trade Finance

Trade Finance is a solution to bridging a cash flow gap within your business. This is the gap between you paying for materials or stock and receiving payment for selling your product or service.

This gap can cause a financial problem; you have to buy from your suppliers to make money, however you need money to buy from your suppliers.

But with Trade Financing, you can pay your suppliers, both local and overseas, upfront without having to dip into your cash reserves. This gives you the ability to produce your product or service, when you don’t have sufficient working capital to do so, or to preserve the working capital you do have.

Asset Finance

Purchasing new equipment for your business requires a large capital outlay. Many businesses don’t have ready access to significant liquid capital or funds.

If you’re in the market to purchase commercial vehicles, wheel-based assets, earthmoving and construction equipment or general engineering and manufacturing equipment - the large upfront cost can have a detrimental impact on your cash flow. 

Asset finance can be the solution for your business. Finance is available for a wider range of quality new and used assets, including equipment that you already own. You can preserve your cash flow and working capital by financing the purchase of new or second-hand equipment or by accessing the equity in the equipment you already own.

Both these scenarios can help your business stabilise cash flow while leaving working capital available for continued growth.

How to know when you need small business finance

If you answer ‘yes’ to any of the following questions, it’s a sign that finance could help your business. 

  • Do you sometimes struggle to pay all your business debts on time?
  • Are you missing out on opportunities to grow due to a lack of working capital?
  • Do you need to upgrade your equipment?
  • Do you have capital tied up in equipment that could be better used elsewhere?
  • Do you have unpaid customer invoices?

 If you’d like to learn more about how Earlypay can help your business with invoice financing, asset finance or trade financing arrangements, please contact our friendly team on 1300 760 205 or [email protected]

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