Single Invoice Finance

Learn how single invoice finance works with Skippr

What is single invoice finance?

Single invoice finance, also known as selective invoice finance, is a type of invoice finance that lets businesses access cash that’s tied up in one or more unpaid invoices. Rather than having to wait for those invoices to be paid, single invoice finance can release those funds upfront and they can be used to fund business growth.

Single invoice finance can either be disclosed to your customers or non-disclosed. If it is disclosed, and more like invoice factoring, the factoring company will generally take on responsibility for managing and collecting invoices. If the selective invoice finance is non-disclosed (or confidential), the collections responsibility and contact with customers will stay with the business.

Lenders who offer single invoice finance typically advance up to 80% of the invoice value upfront and when the invoice is paid, the extra 20% is paid back to the business less a fee.

Repayment
When your customer pays the invoice
Charges
Interest 8 - 15%
Fees 1.0% - 3.0% per drawdown
Speed
Can be same day funding
Collateral
Invoices are the security

Pros

Don't need to wait for the invoice to be paid to receive funds
Invoices are collateral not real estate property
Based on credit of your invoiced businesses
Flexible access to funding

Cons

Cost will be higher than if real estate security is used

How does single invoice finance work?

If customers had reasonable payment terms and always paid on time, there would be less need for single invoice finance but unfortunately that’s rarely the case. This is why single invoice finance and other types of invoice finance have been used by businesses for thousands of years and is becoming a much more common in Australia.

Having reliable access to cash flow is essential for any growing small business. Whether it’s for paying suppliers, your employees, investing in equipment or stock or simply having the confidence to take on that big new order, having cash available when you need can ease a lot of the stress of being a small business owner.

How single invoice finance helps cash flow

Single invoice finance lets you unlock cash from your unpaid invoices at the time of issuing your invoices. Instead of waiting for your invoices to be paid, you can smooth business cash flow and bringing forward those amounts you are due and they used for business operations or to invest in growing your business today.

What will single invoice finance cost you?

If you are prepared to offer your home as security for a business loan you will almost always get the lowest cost of funding for your business. The other extreme is unsecured business loans where no security is taken and lenders have to charge more for the additional risk.

In between real estate secured loans and unsecured business loans sits Asset Based Finance. This is where a borrower uses an asset on the balance sheet of the business as security for a loan. Common examples of asset backed finance are vehicle finance and equipment finance. Single invoice finance and other types of invoice finance are other examples of asset based finance. By using your accounts receivable ledger as collateral, you can lower your cost of funding without having to mortgage your home.

When is single invoice finance worth the cost?

Single invoice finance is often more expensive than a loan secured by real estate but many business owners probably don’t want to mortgage their house for the business. Single invoice finance is also more flexible and less expensive than unsecured business loans as business owners can draw funds against invoices only when you need a cash flow boost and you will not be paying interest on funds you don’t need. Invoice finance is also repaid when your invoices are paid and not regular repayment periods which a lot of borrowers like.

The funding flexibility of selective invoice finance and other types of invoice finance can provide peace of mind for business owners knowing that cash can be unlocked from the ledger when required. It can also give business owners the confidence to invest in their business and take on new orders knowing that funding them won’t be an issue.