Invoice discounting is a powerful financial tool that can facilitate time efficient cash flow for auto repair industries. It can be highly advantageous when working capital is required to continue business operations, or to invest into business expansion. In this article, we will explain what invoice discounting is and how it can work for your business.
How does Invoice Discounting Work?
Auto repairs businesses perform a lot of work that is covered by the motor insurance industry. This means that there is a high degree of security and certainty regarding the payment process once the claim has been approved. Because of this, auto repair work is reliable, but unfortunately insurance companies can take weeks or months to pay approved claims. Thankfully, invoice discounting companies are available to step in and buy the approved invoice and pay the next day. This allows the auto repair company to get on with their business without waiting on the capital to be paid from the insurance company. The company that buys the invoice takes a small fee from the invoice amount, typically less than 2% as their payment for providing next day capital to the auto repair business.
When is the right time to use Invoice Discounting?
There is no specific right or wrong time to use invoice discounting. There is no need to use it for every invoice. Depending upon your business circumstance it might make sense to use it irregularly, during times when you need a lot of working capital for a business upgrade, or due to issues with regular cash flow.
It could be exceptionally useful if your business has an influx of high value work, and you need money in a hurry to facilitate purchasing new parts and/or paying extra staff for a short period.
What are the Major Benefits of Invoice Discounting for Smash Repairers?
Smash repairers, detailers and mechanics regularly deal with a vast array of different valued vehicles, and some jobs require significantly more outlay for parts and labour than others. A sports car may warrant tens of thousands of dollars’ worth of parts, and the wait time for previous invoices to be paid can lead to peaks and troughs in capital, and purchasing power. This might mean you are forced to turn down a job that has the potential to bring you a significant revenue, because it will put you out of pocket until the invoice is paid. If you utilise invoice discounting, not only can you free up cash from your existing invoices, but when your high value job is complete, it can be paid almost instantly by the invoice discounting company.
Working Capital Finance Can Help Your Business with Invoice Discounting
Working Capital Finance are leading providers of invoice discounting for smash repairers, panel shops, detailers and mechanics in Australia. If you think this service is right for your business, please talk to one of our professionals today by calling 02 9968 2328 or contacting us online.
Please note: The content of this article should be considered informational and not construed or considered to be actual financial advice.