They say in business that “cash is king” and with many businesses battling to stay viable due to the coronavirus pandemic, this has never been more true. Richard Liew talks to Hayley O’Connor, cofounder of Buffer – a business financing option relatively unknown in New Zealand, that they hope will help Kiwi businesses speed up cashflow.

A major challenge for many small businesses is managing the time between delivering their products and services, and waiting for customers to pay.

To make it even more difficult, small business owners often have to pay for the stock, materials, wages or other expenses required to deliver their products or services, before the customer pays them. Many businesses pay their bills on the 20th of the month following receipt of invoice, which means suppliers could typically be waiting anywhere from three to seven weeks to get paid for the work they have already done.

In some cases businesses have even longer standard payment terms – up to 90 days for some larger companies meaning their suppliers effectively have to manage a cashflow ‘hole’ of approximately three months.

In this interview, NZ Entrepreneur editor Richard Liew speaks with Hayley O’Connor, the cofounder of finance startup Buffer, to learn more about a form of business finance known as invoice financing.

Popular in the US and UK, invoice financing – also known as invoice factoring – is still a relatively unknown financing option in New Zealand.

Since launching, the team behind Buffer have been working to make this kind of financing more mainstream in New Zealand, after successfully helping companies going through financial hardship after the Christchurch earthquakes.

When waiting for customer payments leaves companies without sufficient cash flow, Buffer allows business owners to receive a cash injection based on invoices they are waiting on, rather than loading up the balance sheet with long term borrowing and then hoping to grow the business in order to pay it back.

Effectively it enables businesses to sell or borrow against their chosen invoices, at a percentage, in return for cash now – speeding up access to the funds the business has tied up on their debtors ledger.

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