Frequently Asked Questions
If you cannot find the answer from the list below, please contact us with any questions. We are here to help.
What is invoice financing?
It may sound complex, but in fact, it is very straightforward. When your business delivers goods or services to your customer on trade terms, you raise invoices which are current assets to your business sitting in the Account Receivables of your Balance Sheet.
The process of unlocking cash flow against your unpaid invoices — also known as invoice financing, invoice discounting, or factoring — is the sale of these unpaid invoice/s at a small discount to the face value of the invoice in order to speed up the cash flow for your business.
It’s similar to offering a discount on your invoice to a debtor if they paid you ”cash on delivery”, but as we know, offering debtors discounts to speed up payment rarely works.
So by getting your money upfront, instead of waiting 30 to 90+ days for your invoices to be paid, or needing to offer customers discounts for early payment, businesses can meet many of their working capital needs including major investments with invoice finance.
Is this an unsecured loan?
No! We are not lending you money, therefore there are no regular weekly or monthly repayments which creates an ongoing liability.
Our innovative cash flow solution, using debtor funding, requires no property security as collateral. We use your Accounts Receivables ledger as collateral. The larger your ledger, the more funds we will advance you.
Our funding to your business is an advance against your issued but unpaid invoices to your customers. You tell us how much money you need and provided you have sufficient debtors (unpaid invoices) in your ledger, we will provide you with the required funds.
You can draw down on these funds at any time and for any amount (minimum $50,000/month) provided you have at least sufficient outstanding debtors for the amount you require.
As your debtor/s pay their invoices as per your current payment terms with them, you are then able to repeat the process of re-drawing down the funds you require, over and over.
It is the same concept as offering an early settlement discount in return for a debtor paying their invoice/s immediately.
So unlike a loan, you are not locked into daily, weekly, or monthly repayments; in fact, there are no repayments at all, we simply wait for your debtor to pay (as per the trade terms you have agreed with your customers) and when they do make payment, we repay ourselves, less a small discount fee based on the face value of the invoice.
Why do businesses use invoice financing?
To get access to cash from their Account Receivables Ledger rather than waiting for their debtors to pay them, these funds can then be used to run and grow the business.
It is the same concept as offering your customer (aka debtor) an upfront discount if they pay your invoice early, and it allows businesses to obtain an advance of up to 90% of the invoice value with the 10% balance (less a small fee) received when the debtor pays.
- Simply complete the online application form
- Upload some of your pending invoices or your entire Account
- Tap into money you already have in your Accounts Receivable ledger
- Unlock cash upfront, instead of waiting 30-90+ days for unpaid invoices
- Eliminate the need for high-interest unsecured loans or overdrafts
- Meet your funding needs quickly and easily
What is a "pre-agreed discount rate"?
From time to time, most businesses have offered their slow-paying debtors a discount for paying their invoices promptly. That is what is called a “pre-agreed discount rate”. (E.g. “Please pay this invoice in full by the 15th of the month to receive a 10% discount.”)
However, by simply stating this on your invoices it rarely works, so our funding partner, tim., has developed a solution to get your cash flowing faster by providing access to funding. Our partner will pay you up to 90% of your invoice/s value upfront in cash. The rest is then paid to you once your debtor pays their invoice in full — minus a small pre-agreed discount rate (usually a lot less than the early settlement discount you would have given to your customer).
There are no hidden fees or surprises.
How much money will we get?
Typically, you receive up to 90% of your invoice/s value up front, in cash.
You then receive the balance of each invoice, less the pre-agreed discount rate, when your debtors pay each invoice.
How long will it take before you receive the funds?
If you are a new client, it will take approximately two business days from you submitting your completed application and supporting documents for us to assess your application to become an approved client.
Into what account does my invoice payment get paid?
When you raise cash flow with us, the initial cash flow – up to 90% of the invoice value – is paid directly to your business operating account.
When your debtor (trade debtor) pays the full invoice amount, it is paid into a bank account that is in your company’s name controlled by, our funding partner, tim. Once the funds are received from your debtor, our funding partner will transfer the remaining portion of the invoice value (less the pre-agreed discount fee), to your business operating account within the next business day.
What is the assessment procedure for new clients? Would my business have to go through a credit check?
Yes, our funding partner, tim., does carry out a credit checking procedure prior to offering you a funding facility.
There are checks done on credit records; for fraud and for other pre-existing PPS registrations.
Additionally, your invoices must be issued directly to a business debtor rather than to an intermediary or a consumer. Saying this our credit process is quick and efficient.
What is the minimum size an invoice needs to be to sell to to Smart Invoice?
The initial invoice value offered for funding needs to be at least $50,000 comprising of one or more invoices. Thereafter, invoices of various amounts can/will be funded with a minimum funding of $50,000 per month.
Will my debtors know that I have sold their invoice?
Yes, your debtors whose invoices you wish to sell will be aware that you have sold the invoice as we ask them to verify the invoices first. However, debtor or invoice financing is such a common form of short term finance in Australia (estimated at over $64.2 billion annually) that it’s become an accepted part of the trading process.
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Please let us know if you have a question, want to leave a comment, or would like further information about Smart Invoice.
Postal Address: Level 14, 309 Kent Street
Sydney NSW 2000
Phone: 1300 33 SMART