New data from the Commonwealth Bank has found 55 per cent of businesses perceive invoice financing as a last resort, while 71 per cent of businesses admitted to having limited knowledge of how the process works.

Clare Morgan, Executive General Manager of Business Lending says invoice financing has conventionally been thought of as very manual and slow. She says this is why CBA is reimagining invoice financing to offer a unique digital proposition, in partnership with fintech Waddle.

Rolling out nationwide this month, Stream Working Capital is CBA’s new digital lending solution which gives businesses access to funds using their outstanding invoices as loan security.

“We’re increasingly getting more questions from our customers about invoice financing. We don’t view our product as invoice financing, rather we’re calling it digital working capital.

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“It’s about moving away from the more traditional forms of lending and moving towards unlocking some of the value that’s trapped in assets such as receivables and inventory.

“Stream Working Capital sees us effectively lending against invoices, so businesses are seeing credit limits adjust in real time based on the value of current outstanding invoices. As the solution is digital end-to-end and integrated with cloud based accounting software such as Xero, a lot of customer pain points are removed. It’s transparent, available 24/7 and offers very fast funding, with a turnaround time of 72 hours, compared to an industry standard of several weeks,” said Ms Morgan.

The research shows half of all businesses would be more likely to use invoice financing if it was offered with their existing business bank (50 per cent), if it was simple and transparent (47 per cent) and integrated into their accounting software (41 per cent).

The partnership with fintech Waddle, means much of the working capital finance process can be automated such as the credit assessment, underwriting and monitoring, to ultimately deliver a better customer experience and faster access to cash.

“Having access to consistent cash flow is vital for every Australian business and we wanted to simplify and digitise the process in order to offer greater flexibility and support for those who need it. We know from speaking to customers and from the research that uneven cash flow is the cause of significant stress for many businesses.

“Using invoices to access credit provides peace of mind for businesses who can now access cash locked up in their invoices, assisting them to pay suppliers or hire employees. It’s an essential part of helping small businesses recover and grow as the economy starts to reopen and businesses navigate this new operating environment,” said Ms Morgan.

Two thirds of businesses (66 per cent) feel frustrated by uneven cash flow, while three in five business owners (60 per cent) feel at the mercy of their customers paying on time. Three quarters of businesses (76 per cent) reveal cash flow issues are limiting their growth, stability and ability to expand or fulfil large orders.  

Jarrod McGrath, is the founder and CEO of Smart WFM, a boutique Australian consultancy with a global presence that empowers its clients to stay relevant in a time of rapid digital advancement. Mr McGrath says Stream Working Capital has been essential for taking the stress out of hiring new staff and allowing him to feel more confident about growing his business.

“We were growing so rapidly and bringing on new staff, however it can be up to 120 days before that new team member is able to generate cash for the business. That’s what I use the facility [Stream Working Capital] for, to help bridge that gap in between recruitment, on-boarding, upskilling, client engagement and right up to the point of invoicing and then revenue generation.

“It’s been key for being able to scale quickly and because of access to this facility, I’m able to pay salaries from the day I on-board someone, which means I can keep growing and stay in control of my business. Being able to employ a capable team member with confidence is gold to me, because it means business growth. 

“Smart WFM’s compound annual growth rate from a revenue perspective over the last three years has been substantial. From a head count point of view, we’ve seen over 220 per cent growth over the last three years. Stream enables us to maintain a substantial growth rate like that and keep that rapid head count growth in place.”

New and existing small business customers can apply for Stream Working Capital from this week by talking to their business banker. For more information visit commbank.com.au/streamworkingcapital

Note for editors: Research was conducted by House of Brand from 20th – 24th September 2021. The total sample included 406 Australian business owners and financial decision makers of businesses with an annual turnover between $1million - $15 million.