ABC Joins Invoice Finance Industry To Support More Businesses
Commonwealth Bank announced its partnership with fintech lending platform Waddle to expand its portfolio of business banking services to bill finance.
For context, invoice finance is a secured line of credit against your commercial invoices, allowing you to access working capital otherwise tied up in accounts receivable.
As Mike Vacy-Lyle, CBA Group Director of Corporate Banking, said, this is a step beyond the traditional process of using fixed assets such as real estate or equipment to guarantee a business loan or an overdraft.
“The loan amount automatically decreases as bills are paid so customers never pay for credit limits they don’t need,” he said.
ABC said its new digital loan product known as Working capital flow finance up to 80% of unpaid bills, while charging medium to high digital interest rates.
The big bank has set a minimum amount of $ 50,000 per invoice, and like most other invoice finance lenders, its services will be limited to business-to-business transactions only.
Working capital flow is accessible 24 hours a day and will use the latest technology and a live stream of customer data through cloud accounting software such as Xero to identify a customer’s specific cash flow needs.
CBA expects automation to reduce manual credit processes by up to 80%, which could mean faster approval times. After applying, companies could receive funding in just 72 hours, instead of weeks.
“We want to simplify the working capital process, especially for small businesses,” said Clare Morgan, executive general manager of corporate loans at CommBank.
Morgan added that the current environment has created a need for invoice financing.
“Our customers have told us they want to be able to hold more inventory and build relationships with more suppliers to mitigate supply disruptions. They are also facing increasing pressure from suppliers who want to be paid earlier and buyers who want to extend payment terms, ”she said.
“Using invoices to access credit solves this problem and can provide some peace of mind for businesses that can now access the money stuck in their invoices so they can pay suppliers or hire employees. ”
Working capital flow is available starting this week for qualifying small businesses, but will roll out to a wider range of customers over the next six months.
Financing invoices beyond the big banks
But of course, CBA isn’t the only lender to offer invoice financing.
A number of non-bank lenders such as Octet, Timelio, and ScotPac also specialize in invoice financing and in some cases their approval speeds are even faster, with financing potentially available in just 24 hours. Read on for an overview of their main features …
Want to continue shopping? Then, make your next stop at the Mozo Business Loan Comparison Center, where you can assess the fees and features of bank and non-bank business loans.