Many small to medium businesses face the same cash-flow dilemma – growing demand vs. slow payments. This common working capital conundrum makes it challenging to survive, let alone grow.
For businesses in South Africa, invoice financing is a way to unlock cash flow without taking on debt. It’s a simple way to meet obligations, pay suppliers, salaries and other costs before payments come in.
Invoice financing is a smart, flexible solution to this funding dilemma – not a last resort.
What is invoice financing and how does it work?
Invoice financing is a method of raising working capital by securing funding against unpaid invoices. Two popular forms are invoice factoring (full ledger management) and selective invoice discounting.
In the former, a business sells its unpaid invoices to a factoring company, which takes over the responsibility of collecting outstanding payments. In the second, a business chooses the invoices to raise funds against.
The funding offered is a proportion of the invoiced amount, up to 80% of the invoice value. At BizFunding, we partner with your business, providing invoice financing of up to R2 million against outstanding invoices.
Fees are fixed and the financing is only paid back when you get paid by your clients. This differs from a traditional loan, which you pay back on a monthly basis.
Unlocking cash flow for your business through invoice financing is quick, easy and can be completed in three steps.
1. Apply. Use the application form to provide details of the funding you want and the invoice or invoices you want to get funding against.
2. Supply documents. Send us relevant documentation, including FICA documents, for validation. We will then draw up an agreement.
3. Get funded. Accept the proposal and get the funding, usually within 72 hours of the start of the application.
Why growing businesses are choosing invoice funding over bank loans
It’s easy to see why growing businesses are increasingly choosing invoice funding over loans from banks and other traditional lending institutions. In tough economic conditions and high-interest rate environments, this is increasingly relevant.
For starters, invoice financing offers considerably faster access to cash. Banks loans are usually slow, sometimes taking months to be processed and approved. They require a cumbersome amount of paperwork to be completed and filed, and often require collateral and a business’ credit history.
In contrast, invoice financing is fast, flexible, and the debt is tied to specific invoices (revenue) already generated. Benefits of invoice financing include:
- maintains ownership and control (no equity dilution)
- no long-term debt obligations
- scales with business volume
- helps businesses meet payroll, purchase stock or take on new contracts confidently.
Sector-specific use cases: manufacturing, logistics and wholesale
It’s easy to demonstrate from sector-specific uses why invoice financing is needed and can work:
- manufacturers face delays in raw material payments, but long lead times for deliveries
- logistics companies face ongoing fuel, fleet, and staffing costs that are front-loaded before clients pay
- wholesale/distribution businesses work for large retailers and corporates that often pay on 30 to 90-day terms.
Invoice financing can help businesses in these sectors maintain operations, invest in growth, and improve supplier relationships.
Local success story: how one business scaled with selective invoice financing
This real (but anonymous) case history demonstrates how one logistics firm used selective invoice financing with BizFunding to get funding and scale its business.
The Gauteng-based business was expanding into a new region, putting it under severe working capital strain. The business used three invoices to corporate clients worth more than R200,000 to raise selective invoice financing.
The boost to working capital enabled the business to maintain cash flow, hire three new drivers, and secure logistics contracts in the new region.
The business did not have to wait for its payments. BizFunding enabled it to turn unpaid invoices into cash with its fast, easy and transparent invoice financing.
Invoice financing in South Africa with BizFunding
Invoice financing is a practical, proven tool for growth-minded businesses in South Africa to get the funding they need without any stress or worries.
At BizFunding, you can be sure of:
- a quick and straightforward process
- fixed fees with no hidden costs
- minimal paperwork and no red tape
- ongoing hands-on support
- funding within 72 hours if you qualify.
To learn more about how to unlock cash flow without taking on debt, call BizFunding on 010 157 2499 or apply online for invoice financing today.
