Busting invoice finance myths

Busting invoice finance myths

Invoice finance has, at times, had a bad rep. It’s old fashioned, a bit dusty, too expensive, hard to apply for, just doesn’t feel like a great option.

There, we’ve said it.

But times have changed and we feel so strongly about how powerful invoice finance can be for small businesses.

Humour us for a couple of minutes while we bust some of the most common myths about invoice finance;

It’s really expensive

In the past, it has been. Many of the established providers will quote a complex fee structure relating to outstanding lends, minimum fee charges, transaction fees, subscription fees and interest calculated on a daily basis. Before you know it, fees start to creep upwards with no idea of where it will end! Oh, and credit insurance is charged as an optional extra.

At Hydr we say “no more” to this! No more opaque, expensive fees. We quote a single fee that is fair and fixed so that you know exactly what you will pay to receive 100% of the value of that invoice (minus our fee) in your bank account within 24 hours. Every invoice we fund is credit insured and our fee once quoted will never, ever change – even if your customer is a little late in paying. No hidden charges, no extras.

It will change how my customer thinks about me

Invoice finance isn’t new. In times gone by, there has been a bit of a stigma attached to it and some negative perceptions. That’s partly because the collections process was managed by people – and let’s be honest about this – who were not exactly in lockstep with your company’s values or aspirations. For them, it was payment at all costs, including your reputation! 

We take pride in building relationships with your customers – that means your customers get to know exactly who we are, what we do and therefore see us as an extended member of your finance team. We work hard to build great relationships with them and in turn, help you strengthen yours. We have clients who tell us their relationship with their customers has improved as a result of us being part of their team.

Yes, we are new, but we are in this for the long term. We appreciate we are dealing with two of your most valuable assets: your priceless reputation, and your invoices which unlock the lifeblood of your company – cash.

It’s not worth the hassle

This is a common one and it’s because the fees, hefty admin requirements and paperwork have put a lot of businesses off even exploring invoice finance as an option. Technology, however, has revolutionised the way we do business. Our technology and class-leading Xero integration mean that the complexity there once was is just not there anymore. Onboarding is quick, seamless and because our fees are fixed, it’s transparent too.

We offer a complete technology integration: once onboarded you simply raise your invoices within Xero as you always do. We then fund them and park them in the right place within your Xero accounts. Then, when we are paid, we enable a seamless, effortless reconciliation.  You can always log in to our customer dashboard but by just by logging into your Xero, you’ll always be able to see what is going on.

I can’t get my full invoice value funded

You would be forgiven for thinking that. Most providers today offer payment for 70% – 90% of your invoice value, topping up the balance when the invoice is paid by the debtor.

For Hydr customers, this just isn’t good enough. We will always pay 100% of the value of your invoice. There’s no catch, no smoke and mirrors. Just full payment, minus our fairly priced, fixed fee in your bank account within 24 hours. We don’t like the complexity of sending you the remaining balance, any more than you like waiting for it!

Our customers might assume we’re in financial difficulty

In the past, some businesses have viewed invoice financing funding as a last resort and would choose it only after they had been refused other forms, such as a bank loan or an overdraft, creating some negative perceptions. However, invoice finance should not be regarded as a sign of weakness because there are so many positive reasons that small businesses have adopted it. We believe small businesses use invoice finance because they’re well managed, confident and ambitious. They might want to ramp up hiring, invest in new ventures or upgrade their equipment. By optimising cash flow and getting those invoices paid within 24 hours, invoice finance enables them to do all of those things.

Just think about how your customers will feel when they see your business going from strength to strength!

It’s a poor way to solve my cash flow dips

No – we disagree! Maintaining a healthy cash flow is at the absolute heart of any successful business. Every business has its unique capital cycle in any given year – invoice finance helps you to bridge those cash flow gaps without having to take on new debt or lose any control of your business.

We’d say invoice finance is one big positive!

Have we managed to change your preconceptions of invoice finance?

Tempted to find out a little more? We’d love to talk to you, contact us today.

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