Here at ScotPac, we partner with many small and medium sized enterprises to ensure they have access to the working capital they need to succeed. More and more, large groups and businesses are using a particular financial solution.
These organisations, many with complex funding and business structure, are increasingly turning to the flexible finance solution that is referred to as Invoice Finance.
To find out more about Invoice Finance, click here, and to explore why large groups are using Invoice Finance, keep on reading.
Why are large New Zealand businesses not using traditional bank funding?
It is important to note that traditional funding facilities, such as business loans, are still used and have their place in working capital management strategies. However, complex funding structure can make traditional bank facilities overly cumbersome.
They typically require multiple applications, securities and covenants for each entity in a corporate group. The more entities the more complexity and friction, all of which slows down decision-making and growth.
For fast-growing groups looking to grow, scale and acquire other businesses, that complexity can quickly become a liability rather than a strategy for success.
What are the key challenges for larger and complex organisations?
- Separate overdrafts and term loans are required for each entity
- Each financial facility comes with their own conditions and reviews
- Group-wide property security can get tied up across several facilities
- Complexity in structure can limit future borrowing options
- Time-consuming annual reviews and covenant reporting for every facility can slow down operations and stretch resources
- Frustration with banks’ fund turnaround times and slow credit decisioning
- Delayed access to funding can make it harder to seize new and time-sensitive market opportunities
How can Invoice Finance help complex corporate organisations in New Zealand?
Invoice Finance is well suited to both small and large businesses as long as they sell on payment terms to other businesses.
Invoice Finance provides flexible access to working capital secured by outstanding invoices.
This means it can be structured in such a way so as to support either a single trading entity, or multiple entities within a group.
For complex business structures, Invoice Finance can:
- Fund multiple debtor ledgers, brands, or trading names within just the one group arrangement
- Support growth and success by increasing the amount of advance funding alongside the growth of sales and outstanding receivables (i.e., invoices issued)
- Provide smooth and reliable cash flow where payment terms are generous to customers
- Work alongside other tools such as Asset Finance, Trade Finance, or even a Line of Credit facility.
How does the Invoice Finance process work?
ScotPac’s Invoice Finance allows New Zealand businesses to access a line of credit from around $10,000 up to significant sums for larger conglomerates.
Once your fast online application is approved, you can draw funds as needed via the online portal.
For groups with multiple entities and overly complex business structures, Invoice Finance can be customised to be even more flexible than a standard bank overdraft or term loan. For example, while an overdraft is usually capped and reliant on the use of property security as collateral, Invoice Finance scales with your sales and is secured against receivables so your access to funding grows in line with your business needs
Why are New Zealand businesses turning to non-bank lenders like ScotPac for working capital solutions?
New Zealand SMEs are facing longer payment times (due to delays in customers paying their invoices), rising labour and material costs and tighter eligibility criteria for traditional finance.
All of this comes at a time when flexible access to working capital is more important than ever. Non-bank lenders such as ScotPac focus on working capital solutions that:
- Offer speedy approval and access turnaround times
- Flexibility in eligibility criteria and access
- Customised solutions combined with the reliability and knowledge of a major finance provider.
Is ScotPac right for you?
- Are you experiencing cash flow pressure as a result of late-paying customers?
- Do you need a working capital solution that can grow with your needs without needing more property security?
- Do you need simpler funding for complex business structures?
ScotPac can help you with all of that and more!
Thinking of Invoice Finance to fund your complex business structure? Talk to our team today
With over 35 years of experience, $26.3 billion in invoices funded annually and a current client base of 9,300 businesses, ScotPac is the non-bank lender of choice for SMEs across New Zealand.
