ABOUT THE AUTHORS: Nicola Weedall and Hector Macandrew are co-founders of Hydr – a new fintech revolutionising invoice finance by helping small businesses optimise their cash flow. With fully digital onboarding, funding decisions in real time, transparent terms and fixed fees, Hydr pays 100% of the value of an invoice within 24 hours, minus a competitively priced fixed fee.
So – what is invoice finance?
Put simply: it enables companies to receive payment for their invoices shortly after they’ve issued them – rather than waiting weeks or months for that invoice to be paid by their customer.
In this article, we’ll explore 5 key benefits that invoice finance can bring to small businesses, and demonstrate that, by building certainty around cash flow, invoice finance can be a tool to fuel growth!
1. It optimises cash flow
No business can afford to ignore its cash flow. But many overlook its importance, placing focus exclusively on the profit and loss (P&L) and balance sheet.
Cash flow is the money moving in and out of your business over a given period of time, and represents your overall financial health. It offers more stability, control and power than any other asset you have in your business.
When it comes to cash inflow from invoices, most businesses are subject to payment terms and the payment behaviour of your debtor. You may have clients that always pay on time. But the terms of your agreement mean that you have to wait the full 30, 60 or even 90 days for payment to reach your account.
You may also have that client who regularly pays you a week (or more) late every month. Whilst you may have come to expect it, it doesn’t get any less irritating – or inconvenient.
Working with an invoice finance partner means you can realise the value of an invoice before your customer pays it.
TOP TIP: With Hydr, once you’ve raised your invoice, we’ll pay it within 24 hours (minus a fixed fee). We’ll also take care of the collection – giving you absolute certainty around your cash inflow every month.
2. It’s an efficient form of financing
When contemplating borrowing, you may immediately think about loans, overdrafts or credit cards – many of which are subject to high interest charges or long, rigid agreements and contracts. They may not always be the right form of borrowing for your needs.
Invoice finance has been around for a long time, and it’s fair to say that some providers have historically been a little opaque in their pricing. This has impacted the perception of invoice finance over the years – and is why it can be overlooked by some businesses.
Hydr wants to change this perception with fees that are fair and fixed, fully digital onboarding and a relationship based service. The fee quoted for your invoice is the price you pay and it doesn’t change – even if your customer is a couple of days late in making payment!
It can be a really effective way to have cash flowing through your business without long agreements or contracts. You can choose how it works for you and for what invoices you want to finance.
TOP TIP: Why not have a look at Hydr’s handy calculator – so you can get a fixed fee estimate before onboarding!
3. It removes the burden of payment terms (and late payment)
Waiting for payment can be a rollercoaster.
You may start the month with optimism that your client might just behave differently this month and decide to pay you a little early.
They never do.
All businesses will recognise that feeling of completing the work, then waiting to be paid weeks or even months later under the agreed payment terms. Worse still, that gut-wrenching feeling of invoice due date coming and going with no payment hitting your account. An awkward chaser conversation looms…
The reality is that payment terms and late payment can induce stress, anxiety, frustration – not to mention time wasted checking and chasing, worrying. This is time you should be spending on your business and what you love doing. It’s why you got into business in the first place, right?
There is a better way! Invoice finance removes the burden of waiting for and chasing for payment.
TOP TIP: With Hydr, you’ll have the money in your account within 24 hours of raising your invoice – allowing you to focus on your business and plan with confidence.
4. It relieves you of awkward payment chaser conversations
You went into business because you love what you do – not to chase payment for invoices.
All small business owners have been there, and it can be really uncomfortable. You spend your time chasing the very people you are working hard to build meaningful business relationships with. And the fact is that payment conversations can impact that dynamic.
This is where someone like Hydr can help. They’re experts in this space and take pride in building strong and professional relationships with your customers – always making sure you look great.
TOP TIP: Hydr will act as a genuine extension of your finance team – and you should view them as such. If it’s something that you haven’t tried before, it’s worth having a chat with them.
5. It enables you to plan for the future
We started with the importance of cash flow, and that’s where we’ll end. Cash is king.
Ultimately the success and resilience of your business is tied to your ability to maintain healthy cash flow. If you run out of cash, it can impact you in so many ways – taking on new work, paying suppliers or even paying your staff. So keeping a close eye on your cash is as important as it gets!
With an invoice finance partner working side by side with you, you’ll have cash in the bank that in turn facilitates stability and certainty – so that you can plan the future of your business with confidence.