When to use invoice discounting

A car needing repairs


Invoice Discounting is a powerful financial tool to release and reinject funds into your business without taking out a loan by selling your invoices. Instead of waiting days, weeks or months for insurers and the responsible parties to pay for the services you have rendered, you can get the money sent to you the next day by a third-party for a miniscule fee. There is no perfect time to start using invoice discounting. However, if your funds are tight, you need capital to work with, and you have invoices pending payment, you can release these funds to make everything flow a bit easier.


Major Benefits of Invoice Discounting

In the auto repairs industry, many repair jobs can be labour and capital intensive. Invoices commonly stretch into the thousands, or tens of thousands of dollars depending upon the make and model of the vehicle being repaired. These costs can be cumulative if a number of high profile repairs are to be carried out before any of the invoices are due. A major benefit of invoice discounting is that as soon as a vehicle is repaired and the invoice is sent out, the repair shop can get cash to reinject into their business by selling the invoice to a third-party invoice discounting company.


Alternatives to Invoice Discounting

The simplest alternative to invoice discounting is to wait for the insurers and responsible parties to pay you. This could be extremely frustrating if you have tens of thousands of dollars’ worth of outstanding invoices, but no cash to spend on current repairs to keep the money flowing.

Another alternative to invoice discounting is business factoring, which is similar to invoice discounting in that your receivables form the basis of a cash flow for your business. However, business factoring is also distinctly different, as the company that factors yours takes responsibility for the risks associated with these receivables. Typically this means that your auto repair business will receive a lower percentage of the overall invoice amount, but you will not have to chase up parties that refuse or neglect to pay their invoices.


There is no Wrong Time for Invoice Discounting

Whether you are upgrading, expanding or modernising your business, it can be useful to take advantage of a cash injection to keep the business afloat if it’s available. There is no necessity to continuously discount your invoices. It can be a once off or irregular occurrence to meet the changing needs of your business.


Contact Working Capital Financing to Organise Discounting of Your Invoices

Working Capital Finance are leading providers of invoice discounting for smash repairers, panel shops, detailers and mechanics in Australia. Based in Sydney, we provide working capital Australia wide, solely to the auto repair industry. Talk to one of our professionals 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.