Smarter funding options to ease cashflow pressure

With cashflow pressures rising and traditional bank lending tightening, SMEs are turning to flexible funding solutions. ScotPac’s invoice finance and tailored lending options are helping Kiwi businesses unlock working capital and keep growth plans on track.

For many SMEs, 2025 has been a year of frustration and resilience. Business confidence has flickered but never quite stabilised, and external shocks – from global trade tensions to conflicts abroad – have kept uncertainty high.

“It feels like we’ve been through three rounds of green shoots already,” says Lindsay Fisher, General Manager of ScotPac New Zealand. “Just as sentiment starts to lift, something offshore knocks it back again. It makes it hard for business owners to plan with confidence.”

The cashflow crunch

One of the most visible impacts Lindsay says has been on cashflow. Payment terms are stretching out, sometimes by weeks, as large customers hold onto cash for longer. That creates a domino effect: SMEs can’t pay suppliers or the IRD on time, tax debt rises, and access to traditional bank lending becomes harder.

Lindsay says this “cashflow squeeze” is the single biggest challenge facing SMEs right now. “When banks look at financials showing overdue creditors or tax debt, they’re reluctant to extend lending. But often the issue isn’t the business model – it’s the timing of payments.”

For businesses hitting a wall with traditional lenders, non-bank options can provide a lifeline. One example Lindsay says is invoice finance – essentially unlocking the money tied up in unpaid invoices.

As Australia and New Zealand’s largest non-bank business lender, ScotPac has been providing such flexible working capital solutions for over 35 years. The company’s flagship product – invoice finance – enables businesses to unlock the cash tied up in unpaid invoices, giving them up to 80 percent of the invoice value up front.

“In simple terms, we step into the middle of the cashflow cycle. If you’ve invoiced a customer for $100,000 and they’ll only pay in 45 days, we can advance you up to 80 percent – $80,000 of the invoice value up front. When your customer pays, you receive the remaining balance, less fees. It’s a proven tool used by companies of all sizes, and it’s particularly valuable for SMEs who need to keep moving without waiting weeks for payment.”

Lindsay says that invoice finance is widely used overseas, from SMEs to large corporates like Coca-Cola. “You don’t have to sit on your hands waiting for payment before you can pay wages or order stock. We’ve helped start-ups cover payroll and established firms take on new contracts without missing a beat.”

When flexibility matters most

For SMEs, flexibility is key. Unlike banks, which often require two years of financials and set facilities in stone, non-bank lenders like ScotPac can take a more tailored approach.

“We look at the story of the last three to six months, not just the last two years. If we can see things improving – new contracts signed, margins stabilising – we’ll work with that. It’s about backing the recovery, not penalising the past.”

ScotPac’s product suite also includes other funding options for SMEs, from quick-turnaround short-term business loans to Trade Finance for managing supplier payments, and a new revolving line of credit launching later this year. “The idea is to let businesses draw down funding when they need it, pay it back when they don’t, and keep interest costs down,” Lindsay says.

One example Lindsay highlights is a labour hire business that launched with nothing but a strong client network and a committed team. “They had the people and the contracts lined up but no capital to cover their first payroll. Through invoice finance we funded those wages in week one. Five years later, they’re still with us, having grown their facility significantly and doubled their workforce. That’s the kind of impact tailored funding can have.”

What SMEs should keep in mind

For business owners considering alternative finance, Lindsay has three pieces of advice:

Know your cashflow cycle. Map when money comes in and goes out. The tighter the gap, the less external funding you’ll need.
Ask about total cost, not just rates. Transparency is critical. “You should know upfront: if I borrow $100,000, what will I pay back and over what period?” Fisher says.
Focus on the value of a ‘yes’. If funding enables you to seize a growth opportunity, keep staff paid, or invest in efficiency, that value can outweigh a higher cost compared to bank finance.

For SMEs, the message is clear: Don’t let cashflow constraints hold you back. Explore the full range of funding tools available, from mainstream banking to non-bank solutions, and choose the mix that fits your business stage and goals.

“Finance should be there to support your plans. It’s about finding the right tool for the job, not a one-size-fits-all solution.”

For more, visit www.scotpac.co.nz.