Invoice Financing is well-suited for small and medium businesses (SMEs) in a wide range of industries. It is a cash flow solution that offers businesses the flexibility required to capitalise on opportunities or for operational expenses in the event the market changes.
If your answer to any of the below questions is a ‘Yes’, your business can benefit from Invoice Financing:
- Your business offers credit term, of at least 30 days
- You experience seasonal demands and therefore, experience cash flow shortages at certain times of the year
- You have a number of customers with outstanding invoices
Here are 5 industries which are particularly suited for invoice financing; read on to find out the reasons why SMEs should consider this type of borrowing.
The construction industry has been notorious for being ‘expensive’ for businesses to thrive in. Besides material and equipment costs, some of the other costs include staff wages and the list does not end there. In addition, having contractors and sub-contractors in a project often leads to payment delays, particularly for SMEs in the middle or end of the payment chain.
Invoice financing is one of the best ways construction companies can benefit greatly. Instead of having to wait and chase for payment, SMEs can order materials and hire without delay. It helps to speed up cash flow and improve the company’s ability to start immediately on the next phase of construction.
Rising labour costs and extended payment terms has made the marine and offshore sector riddled with challenges. Invoice financing can help businesses to meet upfront and ongoing labour and essential material costs while hiring new employees or retain and pay staff on time. This allows them to focus on the day-to-day operations of the business while managing seasonal fluctuations.
For a smooth operation, the purchase of large quantities of materials and maintaining a large staff is deemed essential. Besides dealing with payment terms like any other businesses, manufacturing businesses would also have to factor in other types of expenses which can threaten the entire production. It could range from the need to repair or even replace major equipment. With invoice financing, they can meet their customers’ demands while juggling additional (unexpected) costs easily.
Wholesale and Distribution
SMEs in the wholesale business generally face long credit terms. Invoice Financing for businesses in the wholesale and Distribution sector are especially handy, since businesses often have to wait up to 120 days for payment. Accessing funds at the start of the payment cycle allows wholesale businesses to capitalise on opportunities and create a competitive advantage.
Invoice financing from fintech platforms like Validus allows businesses to access funds in a way that is flexible, affordable, and easy to arrange.
Contracts at any level of government are often on a credit term basis, and can be anywhere between 30 – 120 days. Payment can take time as there are multiple checks in the process before payment is made. Invoice Financing is a suitable financing option for businesses contracting for Government services, as it offers the flexibility to obtain funds as required. Validus is registered on GeBIZ as an approved financing partner for local businesses and this allows your business to take full advantage of the ease of applying for financing.
These are some examples of how certain industries can benefit from invoice financing and the list is not exhaustive. Get in touch with us to find out how you can take advantage of invoice financing for your business.