Frequently Asked Questions
Who is AddCash Finance Pty Ltd? | Back
AddCash Finance is a family owned, privately funded commercial finance company specialising in invoice financing for small businesses operating in South Australia only. We offer our facilities to the very smallest businesses because they are ignored by banks and most other financiers. Because we are a South Australian owned and operated business, we do all of our business right here in SA, where we are known and we know the people and businesses.
What is AddCash Invoice Financing? | Back
AddCash Invoice Financing is a facility which accelerates the cashflow of your business when you have money constantly owed to you by your customers. This is commonly the case where you have made the sale and issued the invoice but your customer won’t pay you for 30 to 60 days. This causes cashflow stress, restricting your ability to increase sales. AddCash Invoice Financing unlocks the cash tied up in these debts by turning credit sales into cash sales. AddCash Invoice Financing is not ‘old fashioned’ Factoring, which can cause real problems with your customers thinking the worst about your business.
Why do businesses use invoice financing? | Back
Because banks and finance companies typically lend only against real estate and similar assets. Cashflow finance is hard to get, and for small businesses it’s almost impossible. Credit cards are often used to get small amounts of cash quickly and some small business people even resort to taking cash advances from the new pay day lenders. Another common way that small businesses try to solve this cashflow problem is by offering their customers a prompt payment discount if they pay quickly, but this rarely works and results in more expense for the business. AddCash Invoice Financing is a genuine alternative which provides cashflow certainty. You are guaranteed to receive the funds for your invoices and you only pay charges to us for those invoices you submit to us for funding.
Is this old fashioned Factoring that I’ve heard about? | Back
No, it’s Invoice Financing not Factoring because we don't manage your sales ledger, we don't contact your customers chasing payments and we don't tell you who to sell to or set customer credit limits.
Who is it suitable for? | Back
Invoice Financing is suitable for manufacturers, wholesalers, importers and many service industries, although usually not for building and contracting industries. AddCash Invoice Financing is specifically for small businesses which are often rejected by banks as being too small. We can help you if you are a growing business with modest sales, or a more established business with strong sales and new opportunities. AddCash is also willing to help businesses that are just starting out provided that the owners are well experienced and the business is otherwise well resourced.
How do I qualify? | Back
If you sell goods or services on normal credit terms to other creditworthy businesses (not consumers) and your invoices are for non-returnable fully delivered goods or fully provided services (not progress claims, stage claims, milestone payments etc.), then you meet the basic criteria. You will also need a clear credit history for the business and its principals. The age of your business, its trading results and your asset position are not key issues in approving a facility for you, as we are more interested in your future rather than your past.
Is it OK if I’m not a company? | Back
Yes, we can provide an Invoice Financing facility to you as a sole trader or partnership.
What security is required? | Back
We usually provide the facility against the assets of your business only so you do not have to give us a mortgage over your real estate. You sign an agreement which sets out the terms and conditions of the facility. The agreement gives you an initial 12 month term which you can seek to renew but you can terminate the agreement at any time without cost or penalty. If you are a company, we will usually need a charge over your company to be registered at ASIC, plus Directors’ guarantees.
How does it work? | Back
You send copies of your selected customers’ invoices to AddCash usually by email. We initially fund 75% of the value of the invoices and the other 25% when the customer pays the invoice. Your selected customers send their EFT payments to an AddCash trust account (you simply advise your customers of a change in your bank details) and for customers who pay by cheque, you just on forward the cheque to us and we bank it, or we might ask that the cheque be sent direct to our post office box. We collect our charges when your customers pay or by deduction from money we fund to you against other invoices. We email regular statements to you, showing amounts funded to you, customer payments received (with remittance details) and our charges.
Do I have to finance all of my invoices? | Back
No, it’s up to you. For facility agreement purposes you sell us all of your invoices and this allows you to select the invoices that you actually want to obtain funds against from time to time. You can finance one invoice at a time, a series of invoices or all of your invoices and you only pay charges on the invoices you finance with us. All we ask is that you finance all of the invoices owed to you by any one customer so that we both avoid the administrative headache of splitting up payments and reconciling customers’ accounts.
Do the invoices have to be current? | Back
No, they can be up to 30 days old when you finance them. This means that you don’t have to immediately decide about your funding requirements when you raise your invoices.
What happens if a customer pays later than expected? | Back
We will usually continue to fund an invoice up to 90 days from invoice date if we’re confident that the customer will pay. After that, you either repay us the amount of money we initially gave you or you can substitute some other invoices of equal value.
Is this facility suitable for a one-off transaction, occasional use or just to have in case of future need? | Back
No, it’s designed for ongoing use as we are unable to maintain unused facility limits. Your facility is activated by an initial financing transaction and payment of the establishment costs within 5 days of approval or the approval lapses. Thereafter, if you don’t regularly use the facility, it will be cancelled. However, if you have seasonal or other irregular but genuinely ongoing needs, we can make special arrangements for you.
Is there a minimum usage requirement? | Back
No, all we ask is that you make reasonable and regular ongoing use of the facility to keep it active and available for your use. You can terminate the agreement at any time.
What does it cost to establish a facility? | Back
There is a one-time-only cost to establish the facility, which covers our costs for searches, documents, stamp duty and registration fees. These costs vary with your business structure and required facility limit, and start from just $200. We collect establishment costs out of the funds of your first financed invoice/s, so you don’t have to pay this upfront.
What is the ongoing cost? | Back
This depends on the size and type of your facility, and ranges from 0.5% to 1.0% per week of the value of each invoice you obtain funding against. For example, if your rate was 0.8% per week, a $100 invoice which you fund with us for 5 weeks, would cost you $4 ($100 x 0.8% = $0.80 per week x 5 weeks). Because invoices can be up to 30 days old when you seek funding from us, you control your cost by deciding how long you want to fund your invoices for. Your cost will typically be less than a prompt payment discount that you might offer to your customers to pay you quickly. And of course the quicker you get your customers to pay their invoices, the lower your total ongoing cost.
Are there any other costs? | Back
If there is no default under the Agreement, then there are usually no other costs, unless we incur a cost on your behalf such as a dishonoured cheque fee or a credit bureau search fee.
What’s the application and approval process? | Back
AddCash makes it as simple as possible. You apply online by answering the application questions and if you qualify, an online approval will be given immediately. You then print, complete and send back our standard Privacy Form with a few other documents so that we can complete our credit checks and confirm your approval. This is done free of charge or obligation. If you then formally accept the approval, we send you a facility agreement for your signature. When we have your signed agreement back, we will establish the facility for you and you then decide which customers and invoices you wish to finance. Our procedures are simple and we will show you how easy it is to access funds. The facility is then settled by your first financing of invoices, which provides initial funds to you and pays the establishment costs.
