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Invoice Finance Vs Trade Finance: What you need to know

trade finance

One of the most important factors of a successful business is cash flow management. Managing customer demand, stock purchases and creditor payments is a challenge that many businesses face.  Cash flow limitations strain operations and inhibit growth. The good news is there are a lot of working capital solutions that increase cash flow.

Two common working capital solutions are invoice finance and trade finance. Both can provide necessary working capital and support your businesses growth. Below, we breakdown a summary of the key things you need to know about each offering and how they can help your business.

Invoice Finance

Most businesses now trade with credit terms which has created a cash flow gap between paying expenses and getting paid by your customer. One of the biggest reasons cash flow issues occur is because of outstanding and unpaid customer invoices. While businesses are waiting to get paid, they are falling behind on supplier payments or struggling to pay other operating expenses like payroll.

Invoice finance allows your business to get up to 90% of unpaid invoices paid early. Rather than waiting 30, 60, or even 90 days to get paid by your customer, invoice finance provides you access to your cash up front.  It is a quick way to get an injection of capital, allowing you to invest in the growth of your business by fulfilling new orders, hiring new staff, and expanding operations.

Trade Finance

Trade finance is another form of working capital finance. It is used to bridge the funding gap between purchasing the stock from your suppliers and selling the goods to your customer. A trade finance transaction takes place at the beginning of the sale process, rather than right at the end. Unlike invoice finance, where the funding takes place once the work is completed, trade finance funding is provided upfront to purchase stock to fullfill a contract or purchase order.

Trade finance is a great choice if you are planning on expanding your business or you have recently won a new contract and require funds to support the anticipated growth. Trade finance is often used in conjunction with invoice finance and provides working capital for the entire sales cycle.

How can Timelio help?

Timelio are specialists in financing invoices and orders of all sizes, no matter what your industry. Unlike traditional business loans, you do not need to have a minimum turnover or operating history, and you do not need to provide property as security.

If you are tired of waiting weeks or even months for invoices to be paid or unsure how you are going to fulfill an upcoming order, Timelio can provide the funding required to help alleviate the cash flow burden.

To find out more about how Timelio can help or learn more about your working capital options, contact the Timelio team at or on 1300 38 63 63.


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