Key Takeaways
- With selective invoice finance, NDIS providers can get cash from specific unpaid invoices without having to commit their whole debtor ledger.
- It helps deal with delays in NDIS funding, making sure that providers have a steady stream of cash to pay for wages, rent, and other business costs.
- It is a flexible solution for clinics, therapists, complex care providers and disability service providers because NDIS businesses can choose which invoices to fund.
- Selective invoice finance can be quicker and more customised than regular bank loans, especially for NDIS providers that are small to medium sized.
- It's important to remember that most Australian lenders don't give invoice finance to NDIS businesses. To find the right lender who will give you this kind of funding, you should definitely talk to mortgage brokers.
- Dark Horse Financial helps NDIS businesses find the right lenders to get invoice financing that meets their needs.
Businesses that help people with disabilities are the most important part of the NDIS program’s success. However, NDIS providers often have a lot of trouble with cash flow because payments take a long time to process, funding is slow, and the scheme can be complex. These financial issues can slow growth, make it harder to provide services, and make it harder to keep track of daily costs.
A lot of businesses wonder what to do when NDIS payments are delayed. Selective invoice finance, also known as spot factoring, is becoming a more popular way for NDIS businesses to get funding. With selective invoice finance, businesses can choose which invoices they want to fund, unlike traditional invoice factoring, which funds all invoices. This flexibility lets NDIS providers get cash when they need it most without being stuck in long term contracts.
This article talks about selective invoice finance for NDIS providers in Australia. It explains how it works, what its benefits are, and how it can be used to support cash flow.
What is Selective Invoice Finance for NDIS Businesses?
Selective invoice finance is a funding solution that allows businesses to fund individual invoices to get an immediate cash advance. You receive a percentage of the invoice value upfront (usually around 85%), and the remainder (minus fees) once the invoice is paid.
This means that NDIS providers can make their cash flow more stable without having to wait for late payments from the NDIS or plan managers. Selective invoice finance is different from traditional factoring arrangements in that not all invoices need to be funded. Providers keep control by choosing which invoices to use for funding.
Why Cash Flow is a Challenge for NDIS Providers
Running an NDIS business often involves waiting weeks or months for payments. Several factors contribute to this:
- Payments through the NDIS system can take time to process due to compliance checks and administrative backlogs.
- When invoices go through plan managers, the approval and payment process can take longer than expected.
- Providers need to cover wages, rent, utilities, and service delivery costs before receiving NDIS payments.
- Expanding services or hiring staff becomes challenging when cash is tied up in unpaid invoices.
For many providers, these delays create uncertainty and make it difficult to plan ahead. Selective invoice finance solves these problems by giving you access to working capital when you need it.
How Does Invoice Financing Help NDIS Service Providers?
Selective invoice financing is very helpful for NDIS service providers who often have trouble with cash flow because funding is delayed. Providers can get a large part of their invoice value right away instead of having to wait weeks for payment. This lets them focus on providing services instead of worrying about money.
Here are some of the ways selective invoice financing helps:
- Manages Funding Delays: It can take a while for NDIS payments to go through. Invoice finance fills this gap by giving providers working capital right away while they wait for the payments to clear.
- Supports Payroll and Staffing: A lot of providers have to pay their support workers, therapists, and administrative staff every week or every two weeks. Invoice finance makes sure that wages can be paid on time, even if there are still unpaid invoices.
- Reduces Financial Stress: When you know you have enough cash flow, you don’t have to worry about chasing payments or using your reserves. Providers can focus on taking care of participants instead of worrying about funding.
- Enables Growth: Providers can hire new staff, add services, or buy equipment without worrying about payment delays getting in the way of their plans if they always have access to cash.
- Improves Supplier Relationships: Paying suppliers on time helps keep good relationships and may give you an edge when it comes to negotiating better terms.
- Flexible Usage: With selective invoice finance, providers can choose which invoices to fund and when to do so. This flexibility makes sure that the facility is only used when it is needed, which helps keep costs down.
How Selective Invoice Finance Works for NDIS Providers
The process of using selective invoice finance under the NDIS is straightforward:
- Issue an invoice: You deliver services and issue an invoice to the participant’s plan manager, the NDIA, or a self managed participant.
- Choose invoices to fund: You select which invoices you want to submit to the financier.
- Advance payment: The financier advances most of the invoice value upfront (usually within 24–48 hours).
- NDIS payment received: When the NDIS or plan manager pays the invoice, the financier releases the remaining balance minus fees.
Benefits of Selective Invoice Finance
Flexibility
NDIS providers can choose which invoices to fund rather than committing to their whole debtor ledger. This is very helpful for businesses that only sometimes have trouble with cash flow.
Faster Access to Cash
Providers can get most of their invoice value within a few days instead of having to wait weeks for NDIS funding.
Improved Business Stability
Providers can pay their staff on time, cover their operating costs, and keep providing important services to participants because they have a steady cash flow.
Supports Growth
NDIS businesses can hire new people, add services, or buy new equipment without worrying about payments being late if they have a steady cash flow.
Works for Businesses of All Sizes
Selective invoice finance isn’t just for big companies. It can help small therapy clinics, allied health professionals, and community care businesses deal with cash flow problems.
How NDIS Businesses Use Invoice Finance to Manage Cash Flow
NDIS providers use invoice finance in different ways depending on their structure and cash flow challenges:
- Therapy clinics: Fund invoices to cover wages for therapists and support staff.
- Support workers and carers: Use finance to manage weekly payroll obligations.
- Community service providers: Fund invoices during high demand periods to make sure services continue.
- Small businesses and sole traders: Access cash flow finance only when needed, avoiding additional debt.
How to Find the Best Invoice Finance Options for NDIS Providers
The best answer depends on how big the business is, how often payments are late, and what kind of invoices are sent out. Providers can get help from a finance broker like Dark Horse Financial to find lenders who know the NDIS sector and can offer services that are specific to these businesses. Brokers look at all the options on the market and help providers save time and make sure they choose the best solution.
Commonly Asked Questions
Is Invoice Finance Suitable for Small NDIS Therapy Clinics?
Yes. Providers can use the facility only when they need to pay certain invoices, so they don’t have to worry about taking on more debt or making payments every month. This makes it especially helpful for small therapy clinics, solo practitioners, and other small NDIS businesses.
What Invoices Can I Fund as an NDIS Provider?
Most invoices issued under the NDIS can be funded, including:
- Invoices billed to the NDIA
- Invoices submitted to plan managers
- Invoices issued to self-managed participants (depending on the financier’s criteria)
How Quickly Can I Get Paid Using Selective Invoice Finance Under NDIS?
The speed of funding depends on the financier and the provider’s setup, but in many cases, NDIS businesses can get funding within 24 to 48 hours of sending in an invoice. This quick turnaround helps providers handle important costs like rent or payroll.
In Summary
Selective invoice finance is a flexible and useful way for NDIS providers in Australia to deal with cash flow problems that come up when funding is delayed. Providers can pay their employees, cover their operating costs, and invest in growth without having to wait weeks for NDIS payments by freeing up cash that is stuck in unpaid invoices. Invoice finance is a flexible solution that can work for any business, whether it’s a small therapy clinic, a community support group, or a growing disability services provider.
Disclaimer: Loans and their accompanying benefits are available only to those who qualify for them and have been approved. Though we put a lot of care into writing this article, the information presented within is general and doesn’t consider your unique situation. It is not meant to serve as a substitute for professional advice, and you should not rely on it solely for any major financial decisions. You should always consult with a professional when you’re dealing with finance, tax, and accounting matters.
Find Selective Invoice Finance Solutions for Your NDIS Business
Selective invoice finance and invoice finance are not typically provided by most lenders in Australia. NDIS providers who want to improve their cash flow and lower their financial stress can work with brokers like Dark Horse Financial to find the right invoice finance facility and keep their business going.
