FREQUENTLY ASKED QUESTIONS
My business is making a profit, why would it need external funding?
All types of business share the same need for working capital in order to operate and pay suppliers, staff, rent and overheads. Even profitable businesses may have insufficient cash to meet these payments. In the long term, a business will need both positive cashflow and profitability to survive, but of these, cash is the most important.
Cashflow problems can occur when a business has to spend money to provide goods and services before it receives payment from its customers. This is the working capital gap that the business may need external funding to finance.
And at a time when traditional sources of external funding are getting harder to access for many owner-managed businesses, invoice finance is proving a popular alternative.
What is the difference between Invoice Finance and Factoring?
Under both types of facility, invoices are assigned to a financier to obtain immediate cashflow. Factoring will be disclosed to customers and the financier will provide debt collection. However, with Invoice Finance, the facility is confidential and therefore not disclosed to your customers or competitors. At Pacific Invoice Finance, we only provide Invoice Finance
Is my business suited to Invoice Finance?
If your business is primarily involved in B2B transactions (not selling to consumers directly) without major performance or contractual considerations then you are likely to be suitable for a facility. To discuss your particular business, give us a call.
Do I need to provide Real Estate security?
Invoice Financing is secured primarily by your debtors’ ledger. Real estate security, such as your family home is not required and can be a major point of difference between a bank overdraft and Invoice Finance
What is the Cost of Invoice Finance?
There are two costs involved with Invoice Finance.
The first is an administration fee for maintaining your shadow ledger on our system.
The second charge is an interest charge calculated on actual amount of funds drawn from your facility. The interest rate on these funds is comparable to those charged by banks for overdrafts. To find out more contact our new business team for an obligation free quotation for your particular business. You'll be pleasantly surprised at how little it costs.
How many years of credit history do I need to have to get an Invoice Finance facility?
An extensive credit history is not required to be approved for Invoice Finance. This is unlike the usual requirements of other forms of finance, such as bank loans and business overdrafts, which tend to focus on perceived worth in the Balance Sheet or insist on taking a charge over a residential home in order to provide a facility.
It is the sales ledger of the business that Pacific Invoice Finance is interested in to determine whether you can access invoice finance.
This means many businesses which may have been turned down for bank funding due to a lack of credit history are often able to get funding through Invoice Finance.
How much do I need to be turning over per annum to access Invoice Finance?
We are able to fund businesses ranging from complete new-starts to established businesses with sales of over $50 million per annum. We will consider businesses turning over at least $500k per annum or have a credible plan to get there.
How much money could I release using Invoice Finance?
This all depends on how much cash you have tied up in unpaid invoices. Pacific Invoice Finance will fund up to 90% of the value of these unpaid invoices. We may make some adjustments e.g. for invoices over 90 days, but usually our funding will still release more than other types of funding, like a bank overdraft.
Will Invoice Finance impact my customer relationships?
No, absolutely not. Pacific Invoice Finance facilities are usually confidential meaning your customers need not know that we are involved.
How is Invoice Finance a better choice than bank funding?
Invoice Finance solutions provide a much safer and more flexible funding solution for many SMEs than bank funding lines.
Simply providing certainty of contract (i.e. not repayable on demand) and increased funding linked to sales, not the historic financial performance, will be a big plus to many businesses.
We’ve put together a comprehensive guide of why invoice finance is a better choice than bank overdraft.
Where are your offices?
Pacific Invoice Finance has offices in Auckland and Christchurch
For the full address details of all our offices, please click here
How quick is the decision-making process?
As we’re an independent this allows us to act promptly on all enquiries. If you use Xero, you can upload data to us here and one of our new business team will be in contact with you within 24hrs. Alternatively you can speak directly with our new business team
Once we’ve initially spoken with you about your funding requirements, our new business team are happy to move the process on as quickly as you like and take into account how soon you need a solution to be put in place.
Assuming everything went smoothly, you could have a facility approved within 3 working days