The Lending Revolution: Invoice Financing in the Digital Era
We’re living in a digital-first era. These days, there’s an app for everything. Food delivery, ride sharing, pet sitting … but it doesn’t stop there. Easy-to-use digital services have become an expectation of essentially every business in every industry.
And financial technology innovators have elevated the concept of service-on-demand in a way that was once previously unprecedented. Not only do your most trusted banks allow you to manage your funds and pay your bills online, but online investing brands make it easy for anyone to start investing—and manage those investments—with just the push of a button (or rather, the touch of a thumbprint).
Now, developers in financial technology (“fintech”) are revolutionizing lending. Those same banks we have become so familiar with are no longer able to keep up with consumer demand for instantaneous digital service. So, when it comes to invoice financing and micro loans, apps like Ario support business owners by removing the middleman and providing instant access to cash flow.
A strong connection with a potential client can often be hard to come by. So, when it does, you don’t want to see them walk away because they don’t have the funds upfront. Or worse, you don’t want to get stuck chasing down an unpaid invoice when you need to be focusing on growing your business and increasing your cash flow. If you’re a fast-growing business or just kicking things off as a start-up, slow payments can become a thorn in your side that will hinder your growth and pull you away from what really matters: doing what you do best.
White label lending
“White label” lending software has become the buzz of the fintech world. White label products allow businesses to utilize a third-party app for which all of its features are totally customized to reflect their brand and its unique style guidelines. It operates as your company’s very own app, without any heavy lift from you in developing it, designing, or customizing it.
Traditional banks can tap into white label banking software to improve the digitization of their banking services. Other start-ups are using this technology to provide credit as a service.
Ario is a lending solution software that provides your customers with instant financing. Among many services, Ario provides lines of credit, payroll financing, and working capital.
But Ario also offers invoice financing.
Ario connects your customers with the cash flow they need to cover an invoice, and direct it to you instantly. This type of borrowing puts the credit on your customers and offers you the financial security you need to keep projects moving.
Here’s how it works.
What is invoice financing?
“Invoice financing is a form of short-term borrowing that is extended by a lender to its business customers based on unpaid invoices.” You could choose to finance your invoices to speed up a slow-moving accounts receivable process, and redirect that money to paying your employees or purchasing supplies. Alternatively, you could opt to reinvest those funds into your company’s operations, so you can focus on doing great work without having to wait for client payments.
Essentially, a lender will provide you with an advance (a large portion of the value of the invoice), which you can use to cover the costs of the project or reinvest into other areas of the business and will then send you the rest once the invoice is paid by the client or customer.
Invoice financing protects you from slow-paying customers and allows you to close a potential gap in cash flow.
Cash is king
Maintaining an influx of cash is essential for any growing business and can become challenging if you are growing faster than you are getting paid. "Your cash management is what keeps your business afloat and is the oxygen which fuels your growth ambitions.”
If you are a younger company with no credit history and an unsteady cash flow, a traditional bank may be unlikely to provide credit or financing. Invoice financing offers an alternative to overdraft and debt, saving you from a cash flow crisis caused by a late-paying client.
Obviously, invoice financing has a number of benefits for small companies just starting out. However, traditional invoice financing also comes with a number of challenges.
These challenges could include:
You can end up tied down by contract terms and fees
The lender may not chase down client debts on your behalf
There is a potential for a lack of control of the process or the people involved
The process can become lengthy and complicated
An app like Ario makes it so much easier.
Ario is a third-party app that offers lending as a service. Essentially, any sale you make could operate as a micro loan for your customers, the funds of which are directed straight to you. Your customers can simply log onto the online lending software, fill out a few questions and receive immediate access to funding. We provide on-the-spot loans for your customers and manage all of the technology and logistics.
Not only does micro loan software like Ario benefit your business by improving cash flow with steady, reliable income and increasing sales (the convenience of easy financing is no-brainer for customers on the fence!), it supports your customers as well. Access to money is easy and convenient, and flexible payment terms provide a peace of mind that can’t always be found with traditional lending.
With Ario, we fund your customers, so they can fund you.