How invoice discounting can help your cash flow


May 10 2022

According to statistics published in 2019 by the Small Business Administration (SBA), approximately twenty percent of business start-ups fail within the first year of operation. The Australian Securities and Investment Commission states poor cash flow as a reason 40% of businesses collapse.

Cash flow management is essentially understanding the amount of money coming in and out of your business from month to month and in any business, invoicing plays a huge part in that. But how can invoicing help your business cash flow even more effectively?

Invoice Discounting with bzTrack

When you hear the term ‘invoice discounting’ you may be thinking in terms of gaining access to cash tied up in unpaid invoices via a lender. Companies dealing with invoice discounting can lend you up to 95% of the value of unpaid invoices, paying out in days rather than weeks (and once you receive the payment from the customer, you pay back that loan — with interest.)

What if there was a way to cut out the ‘middle man’ (i.e. the lender) and still receive your money days or weeks earlier than planned?

With bzTrack we have built invoice discounting into the platform to offer you more flexibility and control over your payments and cashflow. By offering your customers a discount on an invoice if they pay that invoice early (for example, a 10% discount when they pay within 7 days rather than the standard 30, 60 or 90 days), you get money into your account quickly and they benefit from a reduced rate.

How can it help my cashflow?

Say you have four invoices that are each worth $1000 and these are all due to be received within 60 days.

You have a bill of $3000 that needs to be paid within 30 days or you’ll be charged a late fee of $100.

For the first customer (who might be a repeat late-payer), you offer them a 5 % discount if they pay within 10 days (which they accept).

The remaining 3 customers all receive a 3% discount if they pay within 20 days, which they too all accept.

Within 20 days rather than 60 days, all of your outstanding invoices have been paid and you have received $3860 giving you plenty of available cash to pay your supplier’s bill and not incur any late fees.

All of your invoices are accessible from your bzTrack dashboard and you’ll be alerted when payment has been made. You can set up customised discounts for all of your customers, or set individual ones to suit a particular business you’re trading with.

From the Dashboard, you can also set customised reminders so any customer who has a habit of paying after the invoice deadline, receives numerous reminders which are automated so you don’t have to keep chasing them a week before payment is due, 3 days and on payment day.

Get started by creating a FREE account here and start managing your cash flow more effectively.