Your business is profitable, so why isn't there enough cash in the bank? Here's how invoice finance, lines of credit and unsecured loans close that gap, and what to check before you sign anything.
Your business is profitable. The P&L says so. Your accountant says so. You can see it in the revenue line. So why are you checking the bank balance before you run payroll?
Profit and cash are two different things. You can have plenty of one and none of the other, and the gap between them is where otherwise good businesses quietly get stuck. We see it every week at Thriver Finance: businesses turning over $1m, $2m, $5m a year, profitable on paper, where the owner still can't pay a supplier without doing mental arithmetic on what's landing this Friday. It's not a revenue problem. It's a timing problem, and it has a fix.
Most business owners who feel cash-strapped assume they need more sales. Win more jobs, chase more leads, grow the top line. That instinct is almost always wrong.
You pay suppliers in 7 days. Your customers pay you in 45. You cover wages every fortnight. That invoice you sent three weeks ago is still sitting in someone's accounts payable queue. The gap between money going out and money coming in is where businesses get hurt, and it has nothing to do with how good you are at your job.
Cash flow finance closes that gap. Not by borrowing against your house or selling equipment, but by borrowing against what your business already earns. There are three main ways to do it, and each one works, costs, and suits a different situation.
There is no single best cash flow product. What works for a labour hire company with $200k in unpaid invoices is wrong for a seasonal business that just needs a safety net between project milestones. Here are the three we recommend, what they actually do, and who they suit.
You have invoices out to customers who haven't paid yet. Instead of waiting 30, 60 or 90 days, a lender advances you up to 85% of the invoice value within 24 hours. When your customer pays, the lender takes their cut and sends you the balance. Invoice factoring means the lender collects payment directly and your customer knows a third party is involved. Invoice discounting means you keep managing collections yourself and your customer never knows.
A revolving credit facility with an agreed limit. You draw on it when you need cash and pay it back when money comes in, and you only pay interest on what you actually use, not the full limit. It suits businesses with seasonal or lumpy cash flow who need flexible access rather than a lump sum, covering things like payroll, supplier payments or bridging between project milestones.
A lump sum with fixed repayments over an agreed term, usually 3 months to 3 years. No property or equipment required as security, since the lender assesses your business revenue and credit history instead. The word "unsecured" is slightly misleading though: most lenders still require a personal guarantee from the directors. You're not pledging an asset, but you are putting your name on it, and that distinction matters more than most people realise.
Rates and terms are indicative and vary by lender and business profile.
| Product | Best for | Typical cost | Security |
|---|---|---|---|
| Invoice FinanceDebtor finance | Solid B2B invoices, growing faster than cash flow keeps up. Common in trades, professional services, transport and labour hire. | 1% to 3% service fee on invoice value, plus interest on the drawn amount | Usually no property required |
| Business Line of CreditOverdraft | Seasonal or lumpy cash flow needing flexible access rather than a lump sum | 10% to 25% p.a. variable, plus a line fee of 1% to 2% of the limit per year | Secured or unsecured, depending on the lender |
| Unsecured Business Loan | A specific amount for a specific purpose, with fixed repayments you can commit to | 9% to 20% p.a., typically $5,000 to $250,000 | No property, but usually a personal guarantee from directors |
Cash flow finance is a tool. It works well when used right and causes damage when it isn't. Here are the traps we see businesses fall into, and every one of them is avoidable if you know to look for it.
Even for products marketed as unsecured, most lenders ask directors to sign a personal guarantee. If the business can't repay, they can come after personal assets: your house, your car, your savings. Ask exactly what you're guaranteeing before you sign. If the lender won't explain it clearly, walk away.
A loan with a low monthly repayment sounds manageable, but stretch the term out and the total interest paid can dwarf the original amount. A short-term product at a higher rate can cost less overall than a longer one at a lower rate. Always ask what the total dollar amount you'll repay is, and compare that to what you're borrowing.
Taking out multiple products at once, a loan plus invoice finance plus a line of credit, can overwhelm your daily cash flow with repayments. Lenders call it stacking, and it's one of the fastest ways to turn a cash flow problem into a survival problem.
Some lenders offer to top up or roll your existing advance into a new one before it's paid off. This can create a cycle of debt that compounds. Be cautious with any lender who pushes this.
Early repayment penalties, default interest rates, what happens if your revenue drops, exit fees. These details live in the fine print and matter enormously when things don't go to plan. Get the full fee schedule in writing before you commit.
Every product has different criteria, but most lenders are trying to answer one question: can this business reliably make the repayments? Here's what they use to answer it.
If your situation isn't perfect on every count, that's normal. Most businesses aren't textbook applications. The key is matching your profile to the right product and the right lender, which is exactly where a broker earns their fee.
Not the monthly figure and not the interest rate on its own - the total dollar amount that leaves your account over the life of the product. That's the only number that lets you compare options honestly.
Most lenders, even for products marketed as unsecured, ask company directors to sign a personal guarantee. That means if the business can't repay, they can come after personal assets such as your house, car or savings. Ask exactly what you're guaranteeing before you sign, and get legal advice if you're not sure.
Fixed repayments don't adjust for a quiet month. Lines of credit offer more flexibility, but check whether there's a minimum draw or repayment requirement. Know the worst case before you sign, not after.
Some products charge an early repayment fee. Others have a fixed total cost regardless of how quickly you repay, so there's no benefit to paying early. Know which one you're getting before you commit.
Establishment fees, monthly service fees, late payment fees and exit fees can all apply. Get the complete list in writing. If a lender can't produce it quickly, that tells you something about how they operate.
Mainly your bank statements from the last three to six months, showing consistent revenue. For invoice finance they'll also want your debtor book. Beyond that: time in business, personal and business credit history, and your industry.
We work with over 40 lenders across the market, not just one. Book a 15-minute call and we'll walk through your options together. No jargon, no pressure.
Schedule a callThis guide is general information only and does not constitute financial advice. Always consult your accountant or financial adviser before making decisions about business finance. Thriver Finance Pty Ltd, Australian Credit Licence 389087.