Conventional wisdom tells businesses to turn to bank loans and overdrafts to handle cash flow speed bumps. Increasingly we're seeing that wisdom needing to be challenged. The RBNZ March 2021 credit availability survey showed a significant reduction in banks tolerance to risk. Put together with calls for greater LVR restrictions and there could be significant shifts in how banks respond to businesses that need a finance facility.
Invoice Finance is very different. We treat invoices like assets. They can be borrowed against with no additional security. Many business owners value not having to offer their personal assets as security.
At Lock Finance, we want to help entrepreneurs succeed. We spend time getting to know our client's and their business. We offer tips on how to improve cash flow. We invest in building trusted relationships with our clients. This allows us to deliver a responsive service that meets business growth needs. This is especially useful if you are growing fast, have secured a new contract or have a seasonal element to your business.
If you’re planning for growth, getting a scalable working capital solution is key. We’ve helped many successful NZ businesses grow without putting personal assets at risk.
Recently we worked with a frozen food company on the cusp of high growth. They were about to start selling to one of New Zealand's major supermarkets. Their revenue was $1.5M and their bank approved an $80K overdraft facility.
They couldn't buy enough materials to satisfy the order volume. Their accountant referred them to us, to solve their growth cash flow problem.
We immediately provided an invoice finance facility of $150K based on their invoice assets. We were also able to offer them a further $100K once they started selling into the supermarkets.
They were able to effectively double their access to cash for growth. This meant less stress meeting payroll and supplier payments. Pretty good in an environment where banks can take weeks to approve applications, and expect the keys to your house before saying yes.
Our clients are often surprised when they analyse the cost of a bank overdraft versus invoice financing. Especially when they realise what having access to more cash immediately would allow them to achieve.
If you would like to hear more about how you can unlock working capital from your unpaid invoices, feel free to call 027 476 4297, or email craig@lockfinance.co.nz.
