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Add Invoice Factoring To Your Services — A Step by Step Guide

Accountants & Bookkeepers serve their clients in many capacities, but they all have one thing in common: They are the critical piece in ensuring the finances work so businesses thrive. If you’re a bookkeeper or accountant who works with small business, one of the most crucial roles you can play is managing cash flow.

What is Cash Flow?

In business, two of the most important words in the English language are “cash flow.” It’s important for small businesses to recognise that this concept is different from income or profit on an accrual basis. Just because a business finishes work and sends an invoice doesn’t mean they’ll get paid right away.

Managing cash flow can be challenging when sales are down, but it can be even more difficult when sales are up. Profitable and growing companies fail from poor cash management. If deals are coming in left and right, a business needs cash to fund the work for these projects, not to mention critical expenses such as payroll, vendor bills, and other expenses. Invoice factoring fixes this issue by bringing forward payment when it’s needed.

What Does Good Cash Management Look Like?

The golden rule for good cash management is that it’s easiest to stay on top of it. A little bit of preparation results in a lot less stress over the long run.

Luckily – there are a lot of cash flow management tools out there that can make this easier. One example is Debtor Daddy, who can help you handle your overdue payments; but there are so many more out there.

As an Accountant/Bookkeeper – you get the opportunity to proactively prepare clients for any rainy days.

Below are a few common ways you help your clients manage their cash flow better:

  1. Ensure the books are timely and accurate
  2. Understand your clients’ relationships and payment histories
  3. Shorten payment terms with customers where possible
  4. Lengthen payment terms with vendors where possible
  5. Translate accounts receivables into your cash flow statement
  6. Use invoice finance when needed to allow growth and for those unavoidable cash flow issues that nearly all small businesses will face.

What Is Invoice Factoring?

With proper planning, you can help your clients get into a stable position.

However, small businesses often don’t ask their accountant until they’re in trouble, or sometimes, not until they are deeply in trouble! And if a client is struggling to make payroll, they probably don’t want to hear, “You should have set this up months ago.”

Internationally, Invoice Factoring is a well-known solution to relieve cash flow pressure and allow growth. However, Invoice Factoring has not been suited to small business needs, until now.

FundTap’s Invoice Financing

FundTap redesigned and fixed invoice financing to give clients complete control over their accounts, with a highly digitized invoice financing system. The simple, transparent service facilitates business growth quickly and easily by turning outstanding invoices into immediate cash, so your clients can grow and run their businesses, pay their employees and bills, and easily manage cash flow.

FundTap uses a different approach than traditional bank finance to help you solve cash flow hurdles as they arise and integrates seamlessly with cloud-based accounting software such as Xero, MYOB, QuickBooks and Reckon.

Accessing it is a simple process: If you have a trading history, sign-up for FundTap and link your accounting software.

  1. Sign-in and select the outstanding invoices you want to be paid.
  2. FundTap’s team reviews and approves the invoices then pays you. Approval is usually within hours.
  3. When your customers pay you, the money goes into your account, NOT a FundTap trust account, and you repay FundTap by direct debit. If you expect any delay in payment, you can change the date we direct debit.

There’s no application fee, establishment fee, system fee, and no early repayment fee. Instead, you pay a one-off fee, only when we advance your money. Even better, with no lock-in contract, you can use FundTap only when you need funds, and don’t pay a cent when it’s not needed.

The combination of your business banking facility and the variable funds FundTap provides means you have the flexibility you need to meet the ever-changing cash flow requirements of a small business. Plus, you’re backed by our supportive team that understands the NZ/AUS business market.

Help Your Clients in Good Times and Bad

Bookkeepers and accountants can do many things to help their clients manage cash flow, and almost nothing is more important to a small and growing business.

82% of all businesses that failed said cash flow was the number 1 reason for failure. So your role in advising clients manage their cash flow issues is critically important and a huge value add.

Finally, know that invoice financing is another way to help your clients with cash flow at any stage of their business. Those accounts receivable are their asset and can be tapped now, so they aren’t at the mercy of bad payment terms or slow payments from customers.

Help them prepare during the good times. Help them manage during the rough times.

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