Here's a useful guide showing what's happening in the UK - the same options are rapidly developing in Australia: Businesses that are expanding rapidly face challenges from all sides. They may be recruiting at a fast pace, experiencing increased competition and market pressures, they may need to invest in production, marketing and development almost simultaneously and the management team may also be looking at new ventures and territories.
If this sounds like you, then you will be familiar with the sensation of having to keep all the plates spinning, while also professionalising your business – perhaps taking on greater financial or managerial clout. You might be recruiting at director-level, while also cementing existing relationships with everyone from new recruits to your oldest customers.
As a thriving, established business, you have already established your credentials. But this can mean former means of raising finance – business angels or equity investment – are now closed to you, because your value as a business is higher.
Peer-to-peer business loans, both secured and unsecured, can still provide a meaningful source of finance (link for stage 3) as can crowdfunded bonds.
However, there is another key option; your existing sales ledger is can also provide a valuable source of income via invoice trading. Online invoice trading platforms connect businesses with a pool of investors who will advance funds against existing valid invoices. Instead of waiting out long payment periods, businesses trade their invoices and receive a percentage of their value – around 80% - with a minimal waiting time.
Online or alternative invoice finance improves on the traditional approach to invoice finance and factoring considerably.
Firstly, it is possible to trade a single invoice, rather than surrendering a complete sales ledger to a provider. The technology platform keeps costs low, and decisions on creditworthiness are rapid. Generally, platforms approve businesses within a day, provided they can produce bank statements and accounts. Once invoices are validated funds can be made available straightaway. Costs come in at around one to three per cent, but over time this kind of finance becomes more cost-effective, with discounts for subsequent invoices.
Invoice finance is a useful means of improving cash flow and unlocking access to working capital. It is particularly helpful for businesses considering export markets where payment cycles can be unpredictable particularly in the short term.
For more sources of funding as well as advice on boosting growth, look at My Business Support Tool at www.greatbusiness.gov.uk/mybusinesssupporttool