Can you use Invoice Finance and a Business Line of Credit facility at the same time?

Yes. That’s the short answer.

The long answer is that stacking products and financial solutions to ensure best results for your small or medium sized enterprise (SME) can be a great solution for your cash flow management problems.

To find out more about how Invoice Finance in NZ specifically works, visit our product page today.

What is Invoice Finance in NZ and how does it work?

Invoice Finance allows your business to unlock otherwise inaccessible cash in your unpaid invoices.

Instead of having to wait to the 30, 60 or 90 days of your payment terms you can access the working capital needed to fund ongoing operations, take advantage of market opportunities and smooth over gaps in cash flow.

How does it work?

You can secure a line of credit by leveraging your unpaid sales invoices as security.

  • You submit your unpaid invoices for funding
  • You receive up to 85% of the cash owed to you in advance
  • Receive the balance when the invoices are paid less outstanding fees

What are the benefits of Invoice Finance?

  • Maintain control of the invoices you submit for funding
  • Grow your funding limit as your business and sales grow
  • There is no need for property security
  • Eligibility criteria are not dependent on creditworthiness

What is a Business Line of Credit and how does it work?

A business line of credit is a flexible revolving finance facility.

This means you can draw funds up to a certain pre-approved limit when you need, then repay the amount and redraw the funds in the future.

By only paying interest on the amount you actually draw and use, this financial facility allows you to cover unexpected expenses, invest in time-sensitive opportunities and ensure effective short term cash flow management.

What are the benefits of a Business Line of Credit?

  • On-demand access to working capital up to your pre-approved limit
  • Cost-effective solution thanks to interest charged on only the funds your draw
  • Flexible repayment options to suit your cash flow management needs

Can Invoice Finance and a Line of Credit be used as Combined Financing?

The truth is that Invoice Finance and a Business Line of Credit solve similar but distinct problems for SMEs.

  • Invoice Finance allows for longer term cash flow management by focussing on slow debtor payments
  • A Business Line of Credit allows for easy access to working capital for short term needs

When is Invoice Finance better?

Our lending specialist may recommend Invoice Finance when:

  • Your cash flow gaps are caused by customers non-prompt payment
  • Your sales ledger is strong, but you have limited other collateral

Our lending specialist may recommend a Business Line of Credit when:

  • You need fast and easy access to funds for daily operational expenses
  • You need to take advantage of time-critical market and growth opportunities

How does stacking products like Invoice Finance and a Line of Credit work?

Using combined financing in a layered working capital strategy can be a highly effective way to fuel your business’s success.

How does stacking products work?

  • One option is to use Invoice Finance as a primary source of access to working capital.
  • Your Business Line of Credit becomes a secondary facility for use flexibly when you need it.

How practically can you use both finance products to fund different types of business expenditure?

Invoice Finance can be used to fund items like:

  • Payroll
  • Supplier bills
  • Ongoing overhead costs
  • Cost of production

A Line of Credit can be used for expenditure such as:

  • Tax payments
  • One-off repairs and investments
  • Seasonal inventory purchases
  • Short-term growth opportunities

Why is combined financing beneficial?

A stacking products approach can help you reduce pressure on your business line of credit facility and ensure that you have regular, consistent and predictable working capital through your Invoice Finance solution.

Does combined financing not work in some cases?

Yes. Whilst in most instances there should be no confliction, especially if they are structured distinctly against different security, there are some instances where stacking products might not be ideal.

When you work with our lending specialists here at ScotPac we will help ensure that there are no security clashes that could cause conflict between the two securities.

Why choose ScotPac for your combined financing?

For over 35 years, ScotPac has been helping SMEs across New Zealand access the right customised solution to help meet their business’s needs.

To find out more about how our Invoice Finance and Business Line of Credit service offerings work, give us a call today.