Commonwealth Bank has found that 55% of businesses perceive invoice financing as a last resort, while 71% admitted to having limited knowledge of how the process works.
Clare Morgan, Commonwealth Bank’s Executive General Manager of Business Lending says that invoice financing has conventionally been thought of as very manual and slow.
She says this is why Commonwealth Bank Australia is reimagining invoice financing in order to offer a unique digital proposition working in partnership with fintech Waddle.
CBA launches the digital Stream Working Capital
Rolling out nationwide, 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.”
“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 Stream Working Capital 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.
50% of the businesses would use invoice financing if it was offered with their existing business bank, 47% if it was simple and transparent, and 41% if its integrated into their software.
With Waddle, the working capital finance process can be automated like credit assessment, underwriting and monitoring, for a better customer experience and faster access to cash.
“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 Commonwealth Bank Australia 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%) feel frustrated by uneven cash flow, while three in five business owners (60%) feel at the mercy of their customers paying on time.
76% said that cash flow issues limit their growth, stability and ability to fulfil large orders.
Stakeholder comments on Stream Working Capital
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.”
“I use the facility to help bridge that gap in between recruitment, on-boarding, upskilling, client engagement and right up to the point of invoicing and revenue generation.”
“It’s been key to scale quickly and with access to this facility, I can 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 an effective and capable team member with confidence is golden to me, because it facilitates achieving 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 have seen over 220% growth over the last 3 years.”
“Commonwealth Bank Australia’s Stream Working Capital enables us to maintain a substantial growth rate like that and keep that rapid head count growth in place,” concluded Jarrod.
New and existing small business customers of Commonwealth Bank Australia can apply for Stream Working Capital by approaching their business banker for financing advice.