Lifeline for South Island Businesses

Media Release

Date: Monday, 23rd March

Struggling South Island Businesses Thrown A Lifeline By Alternative Funding Company

An invoice discounting franchise in the South Island is offering business owners from Dunedin to Blenheim a lifeline to keep them going until economic conditions improve.

The Interface Financial Group franchise, which opened its doors two years ago, offers accounts receivable discounting that provides a 24 hour turnaround, speeding up cash flow while businesses wait for late payments. Over the past few months, the Christchurch based office has fielded numerous enquiries from local business owners who are struggling with the slower economy.

The Interface Financial Group is a finalist in the 2009 Vero Excellence In Business Support Awards in the category for High Growth businesses

‘Payments are running later than ever and many businesses in the South Island, are finding themselves strapped for cash,’ explains franchise owner, Graeme Irving. ‘On top of this, the banks have tightened their credit criteria. They just don’t want to take the additional risk in the current economic climate.

‘Business owners need to make sure that they have plenty of working capital so they can concentrate on running their company, rather than on financial worries. Alternative funding sources, such as factoring and invoice discounting, free up cash flow so that they don’t have to worry about paying suppliers or employees.’

According to Irving, alternative funding sources are largely overlooked in New Zealand:

‘In Europe and the USA, employing the services of an invoice discounting or factoring company is a common way to keep cash flow healthy between invoicing clients and receiving payment.

‘Business owners in New Zealand need to realise the benefits of these alternative sources of funding and use them to keep their heads above water in these tougher times.’

The Interface financial group is New Zealand’s largest alternative funding source for small businesses. The company has been in existence for over 35 years, with offices throughout the United States, Canada, Australia and New Zealand.

Interface entered the New Zealand market four years ago and now has 11 offices across both the North and South Islands.

Here are some more tips for managing cash flow when times are tough:
• Get invoices in on time. Large companies have rigid cut-off times- being disorganised with paperwork and invoicing late will have an extremely negative impact on cash flow.
• Make sure you have adequate systems in place. A high tech cash flow management programme can be a lifesaver
• If you are experiencing problems, speak to your bank and your accountant
• If they can’t help you, speak to someone else. Seek alternative solutions

What is invoice discounting?
An invoice discounting company will pay your invoices before your clients do, taking a portion of the profits off the top while allowing you to meet your short-term financial commitments. Small businesses in particular benefit because the rates are lower and money cycles through the business faster than it would through a small business loan.

There are many benefits to using invoice discounting to improve your business workflow.

Easier approval
If your business doesn't have a strong credit history, invoice discounting will allow your accounts receivable department to run without resorting to bank loans or lines of credit. If invoice discounting companies look at your credit at all, they do so with far less-stringent criteria than banks and other financial institutions.

Meeting payroll
One of the main struggles small businesses face is paying their employees on time without difficulty. If invoices are paid a month or two behind schedule, you could struggle to process payrolls on time. An invoice discounting arrangement relieves you of payroll worries so you can meet your obligations to your staff.

Take advantage of short-term discounts
Many vendors provide discounts on products and services if you take advantage of offers quickly. When you work with an invoice discounting, you’ll have immediate cash flow to take advantage of these opportunities. In addition, showing an ability to pay your own invoices right away can lead to better relationships with your vendors.

Easier monitoring
Any business can experience times of peak sales growth and periods of decreased revenue. It’s difficult to track these patterns when your invoices are paid on varying schedules. With invoice discounting, you'll be able to track each peak and valley without going back to see when individual orders were filled. In addition, your increased inventory needs can be immediately met during peak seasonal sales.

ENDS

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