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What To Do If You’re Waiting For Payment From Flood-Affected Customers

April 3rd, 2022

If your business has customers in Queensland or New South Wales, you may be finding that they can’t pay their accounts at the moment because the floods have impacted their cash flow. As a result, your cash flow will be affected by the floods too — regardless of your geographical location.

Read on to find out how you can access your money without having to rely on hassling any of your flood-affected customers for payment. With many businesses out of action because of the natural disaster, putting pressure on them to pay their invoices is the last thing anyone needs right now.  

There are hassle-free solutions that can ensure your business can continue operating while you may be facing a rising number of bad debts:

  • invoice finance, and
  • trade credit insurance.  

Let’s look at each of them in turn.

Invoice Finance

Invoice finance allows you to access cash from outstanding customer invoices. Essentially, you can get paid straight away, and your customers will still have their normal credit terms and time to pay. If your cash flow has been impacted because your flood-affected customers are struggling to pay, invoice finance could be a great way to access cash.

An Invoice Finance facility continues indefinitely to ensure your ongoing cash flow and works as a line of credit. Because the line of credit is based on the value of your outstanding customer invoices, the credit amount grows as the value of your customer invoices grows. 

Finance of $50,000 to $15+million is available via Earlypay, using only your unpaid invoices as security, rather than any other assets like your personal property.

      Trade Credit Insurance

      Trade credit insurance can complement your invoice finance arrangement. It provides you with protection in the event that your customers do not pay their invoices. 

      It’s an unfortunate reality that a percentage of bad debts are a fact of life if you offer your customers credit, regardless of natural disasters like floods. However, your bad debts are likely to increase if your customers have been affected by floods or any other natural disaster. 

      Some of your customers may never recover and be forced out of business, while others will have expenses that are a higher priority to pay than your invoice (for example, repairs to help them recommence their operations). 

      If you have Trade Credit Insurance and have been trading with flood-affected buyers, you will likely be covered if they go out of business or fail to pay you for any other reason — your customers may not be in a position to pay you, but the insurance company will be.  

      Trade Credit Insurance gives you the peace of mind that you aren’t relying as heavily on the success of other businesses for your cash flow. It also helps to ensure that you will be able to pay for your Invoice Finance if you have a facility in place.

      If you don’t have Trade Credit Insurance and you’d like to be protected against bad debts in the future (because of natural disasters or many other reasons), it can be a very effective way to mitigate risk and provide peace of mind.

      The bottom line

      Hassle-free finance solutions like Invoice Finance and Trade Credit Insurance can help you prevent your business cash flow from being impacted by any cash flow problems of your customers. They give you greater control over your business finances, as well as more cash flow security.

      If you’d like to learn more about how Trade Credit Insurance and Invoice Finance can help protect your business, please call us on 1300 760 205.

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