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Cash flow finance

Turn your unpaid invoices and current assets into cash, giving your business the cash flow boost it needs.

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Cash flow is one of the most important financial considerations for any business. Unfortunately, it is not uncommon for otherwise profitable businesses to suffer financial hardship in the short term because they are having difficulties with cash flow. Even small cash flow fluctuations can greatly impact on a business's financial status.

What is cash flow finance?

Cash flow finance is a way for companies to borrow funds based on their expected cash flow in the short and medium terms. Cash flow finance can take several forms, but most capitalise on a business's accounts outstanding and other working capital or assets in order to provide funding options to alleviate cash flow problems.

What types of cash flow finance are available?

Cash flow finance can take a number of forms. The best cash flow financing options for any business will always depend on its individual circumstances and the purpose and intended terms of the finance sought.

  • Unsecured business loans. One of the more common ways of alleviating short-term cash flow problems is with an unsecured business loan. Without requiring any type of security, an unsecured business loan relates directly to a business's sales history, with loan terms negotiable between the lender and borrower.
  • Invoice financing. Also known as invoice discounting or factoring, invoice financing frees up funds that are owed to a business by their debtors. In short, the lender or factoring company will buy your outstanding invoices and pay you upfront at a reduced rate, commonly around 80-85% of the total invoice amount. The amount of the invoice is now available for you to use, while the factoring company ensures eventual payment by the creditor.
  • Line of credit. A business line of credit is a form of revolving loan that has similar features to a credit card, except that it generally must be secured to an asset such as commercial or residential property.
  • Overdraft. Similar to a line of credit, an overdraft is a form of revolving loan, with interest payable on the outstanding balance at any time. Overdrafts are typically used to manage a business's ongoing cash flow fluctuations, and are linked to a business bank account.
  • Business credit card. Credit cards tend to have higher interest rates than other forms of cash flow finance but have the added benefits of allowing multiple cardholders and being accepted for point of sale transactions. A business credit card also comes with unique features such as allowing multiple cardholders, business benefits such as points, and easy account management.

What features should I look for in cash flow finance?

Given that there are a number of different means for businesses to obtain cash flow finance, it is important to compare different products carefully and to be realistic about your cash flow needs and your business's ability to make ongoing repayments.

Firstly, eliminate any forms of finance that are not applicable to your situation. For example, if you don't have a significant business asset or property to offer as security, a line of credit will not be a suitable solution. Next, consider whether a one-off cash flow injection such as a business loan is a more suitable option, or if your business would benefit from a revolving loan situation such as a credit card, overdraft or line of credit.

Is my business eligible for cash flow finance?

A business's eligibility for cash flow finance will depend on the type of finance option chosen. For example, invoice financing is notoriously difficult to obtain, with some factoring companies requiring an annual turnover of $200,000 or more before a business can be considered. In addition, invoice financing requires invoices to be rendered on normal credit terms to a large number of debtors in order to minimise the risk to the lender.

A business's eligibility for an unsecured personal loan, on the other hand, will be based on different criteria than eligibility for invoice financing. Eligibility criteria will be more focused on the ability of the business to easily make the loan repayments by considering its past and ongoing sales, rather than focusing on the business's debtors.

Compare some cash flow finance options

Data updated regularly
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Moula Business Loan
Moula Business Loan
$5,000
$250,000
1 to 2 years
2% Establishment fee
A loan of up to $250,000 that can be approved and funded within 24 hours. Available to businesses with 6+ months operating history and $5,000+ monthly sales.
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Zip Business
Zip Business
$10,000
$500,000
6 months to 3 years
No Establishment fee
Borrow up to $500,000 with loan terms of up to 3 years. Flexible weekly, fortnightly and monthly repayment options available with no early repayment fees.
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ebroker Business Loan
ebroker Business Loan
$5,000
$5,000,000
1 month to 30 years
$0 application fee
Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.
Enquire now
Lumi Unsecured Business Loan
Lumi Unsecured Business Loan
$5,000
$300,000
3 months to 3 years
2.5% establishment fee
Apply for up to $300,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
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Max Funding Unsecured Business Loan
Max Funding Unsecured Business Loan
$3,000
$30,000
1 month to 1 year
$0 application fee
An unsecured business loan from $3,000 that offers convenient pre-approval and no early repayment fees.
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Valiant Finance Business Loan Broker
Valiant Finance Business Loan Broker
$5,000
$1,000,000
3 months to 5 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 70 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
Enquire now
Octet Trade Finance
Octet Trade Finance
$200,000
$8,000,000
1 month to 2 years
Transaction fee 2.5%
Access a line of credit to pay suppliers in over 65 countries. Borrow from $200,000 up to $7 million.
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OnDeck Business Loans
OnDeck Business Loans
$10,000
$250,000
6 months to 2 years
3% of loan amount
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
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Heritage Bank Fully Drawn Business Loan
Heritage Bank Fully Drawn Business Loan
$20,000
No maximum amount
1 to 25 years
Application fee is available upon application
Get access to a loan from $20,000 with no maximum limit with Heritage Bank. Loans can be secured by residential and non-residential property and have terms of up to 25 years.
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Prospa Business Loan
Prospa Business Loan
$5,000
$300,000
3 months to 3 years
3% origination fee
Small business loans are available from $5,000 - $300,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $6,000 is necessary.
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Westpac Business Loan
Westpac Business Loan
$20,000
$1,000,000
1 to 30 years
$0 application fee
Purchase a new vehicle, equipment or support your cash flow with a business finance solution from Westpac.
Enquire now
ANZ Secured Business Loan
ANZ Secured Business Loan
$10,000
$10,000,000
Up to 15 years
$600
Benefit from a low rate when you secure this loan with property and/or business assets. Loans from $10,000 available.
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ANZ Unsecured Business Loan
ANZ Unsecured Business Loan
$10,000
$1,000,000
Up to 15 years
$600
Apply for a loan from $10,000 with no security required and benefit from flexible repayment terms.
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Compare a range of invoice finance options

Data updated regularly
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Timelio Invoice Finance
Timelio Invoice Finance
$10,000
$100,000,000
Up to 4 months
$0
Get up to 100% of the value of your invoices without having to wait for customer payments, and with no minimum turnover or operating history required.
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ScotPac Invoice Finance
ScotPac Invoice Finance
$10,000
$150,000,000
From 1 year
No set amount
Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $10,000 in invoices.
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ScotPac Selective Invoice Finance
ScotPac Selective Invoice Finance
$10,000
$1,000,000
1 to 3 months
$500
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.
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Octet Invoice Finance
Octet Invoice Finance
$100,000
$10,000,000
1 month to 2 years
No Set Amount
Convert up to 85% of your company's receivables into cash flow. The value of your receivables need to be worth at least $250,000 to be eligible.
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How much will the loan cost?

The cost of cash flow finance will depend upon the type of finance sought.

  • Unsecured business loan. When determining the cost of an unsecured business loan, take into account the variable or fixed interest rate, application and other upfront fees, ongoing fees, and any applicable default fees, late payment fees or early repayment fees.
  • Line of credit. The cost of a line of credit will include an application fee, typically taken as a percentage of the approved upper limit of the credit line, in addition to account keeping fees, transaction fees and the applicable interest rate.

Similarly, the cost of a credit card or overdraft will largely depend on the applicable interest rate, while also taking into account initial and ongoing fees and charges.

How can I work out if my business can afford it?

Before applying for any type of cash flow finance, whether an unsecured business loan, credit card, line of credit or invoice financing, it is imperative to consider all potential costs of the finance and determine whether your business can afford the ongoing repayments.

This involves considering whether your business truly does have cash flow problems caused by unpaid invoices, or whether the business is generally unprofitable. Alleviating cash flow problems with appropriate finance can be a smart business move that will help tide your business over on an ongoing basis. On the other hand, propping up an otherwise failing and unprofitable business by incurring additional debt will generally only make your business's financial problems worse.

Have more questions about cash flow finance?

What if I don't have equity or an asset to offer as security?

If applying for a business line of credit, you will generally need residential or commercial property as security. However, other cash flow finance options are available for businesses without equity or an asset as security, potentially including a business credit card, overdraft or unsecured business loan.

How does a line of credit differ from an unsecured business loan?

The main difference between the two is that a line of credit requires an asset as security, whereas an unsecured business line does not. In addition, a line of credit is a revolving loan that could potentially last for the life of the business. An unsecured business loan, on the other hand, involves borrowing a predetermined lump sum and making repayments on an ongoing basis, working towards a set repayment date.

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Watch: 5 winning strategies to improve small business cash flow

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