Healthy cash flow is a never ending issue for SMEs. Many businesses are being forced to wait at least a month beyond their agreed invoice terms before getting paid.

The importance of paying staff and suppliers obviously takes precedence over business owners own salary. So how does a business survive if the owners and directors cannot get paid? The good news is that owners do have a variety of financing means available to them to accelerate their cash flow and remedy the slow payment issue over and above a conventional bank facility.

Business owners usually favor bank loans or even credit cards over and above other alternative finance options such as Peer to Peer lending or crowdfunding. This is due in part to the fact that everyone knows that if you want financing you go to your bank. That works and works well if your bank is open for business. Today many banks are shying away from the SME funding marketplace and so the bank is not really an option.

Why then are other forms of financing in the secondary market not widely used. The answer really lies in education-it turns out that most small business owners are just not up to speed on what alternative services are available to them.

Take Invoice discounting or Sport Factoring as an example. Spot Factoring is a strong alternative option for SMEs who are already established and growing but who may need quick access to additional growth capital. Many businesses are thriving, on paper, but in reality, the physical money isn’t in the bank and bills, expenses, salaries still have to be paid. Having solid Accounts Receivable does not necessarily result in a solid cash flow-quite often the opposite is true.

So how does Spot Factoring work?

Spot Factoring is a phrase that still causes a little confusion, although factoring is a method which has been around for the past 4,000 years, spot factoring is still a fairly new development for small business financing. The past decade has seen a rise in the number of factoring services available and this overload of information, as we have indicated may be contributing to the confusion resulting in business still not fully understanding what it is, and most importantly how it can help them grow.

To put it in simple terms, instead of waiting 30, 60 or 90 days for payment, spot factoring allows a business to turn one invoice or a batch of invoices into instant cash There is no loan involved-it is purely a buy/sell transaction offered on a use it when you need it basis.

Unlike many other finance options, this is a process which can be turned around very quickly sometimes in as little as 24 hours the fee structure is very cost effective and naturally there are no hidden fees or expenses. For example, as stated above, you can use this method for just one big invoice, on a one-off basis, or multiple invoices and an ongoing month-to-month arrangement depending on your needs.

It is important to remember that spot factoring is best suited to those SMEs which are established and have reliable clients and are on a growth curve.

Cash is definitely still King and spot factoring may be a vehicle to enhance and accelerate cash flow.

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Instant Cash for Your Business

Interface is NZ's leading alternative finance source for small and medium sized business. We have over 15 years' experience in NZ with our specialist invoice discounting (spot factoring) service and can turn your debtor invoices into immediate cash to pay your creditors on time. Why wait for your debtors to pay you in 30 to 45 days when you can have cash today?