How a Line of Credit Can Save the Day When an Unexpected Cost Arrives

Unexpected invoices and costs can put immediate pressure on a business’s cash flow. In this podcast, we explain how a client came to us after receiving a large invoice they could not afford to pay upfront, and how having a line of credit in place could have changed the outcome.

The Challenge: The business received a large, unplanned invoice that required prompt payment. Without available funds, the client risked falling into debt, missing payments, or potentially impacting their credit profile.

Our Approach as a Finance Broker in Australia: As a finance broker in Australia, we explained how a business line of credit works as a flexible backup facility. With a line of credit in place, the client could have drawn down funds to pay the invoice and spread the cost over time rather than absorbing the full impact at once. Approval of any facility is subject to lender assessment and criteria.

The Outcome: The discussion highlighted how a line of credit can help businesses manage timing issues, protect cash flow, and reduce the risk of missed payments when unexpected costs arise.

Key Takeaway: Many businesses can benefit from having a line of credit approved and sitting in the background. It provides flexibility and peace of mind when unplanned expenses occur.

FAQ: Business Lines of Credit and Unexpected Costs

What is a business line of credit used for?

A business line of credit is commonly used to manage short-term cash-flow gaps, unexpected invoices, or timing differences between income and expenses.

Can a line of credit help avoid missed payments?

Yes. Access to flexible funds can help businesses pay expenses on time and reduce the risk of late payments. Approval is subject to lender criteria.

Do I have to use the line of credit once it is approved?

No. A line of credit can remain unused until it is needed. Interest is generally charged only on the amount drawn.

Is a line of credit better than using a credit card?

It depends on the situation. Lines of credit often offer higher limits and different fee structures, but suitability varies by business and lender.

Can a finance broker help set up a line of credit in advance?

Yes. A finance broker can help assess suitability and apply for a line of credit before it is needed. Approval is subject to lender assessment.

Is approval guaranteed through a finance broker?

No. A finance broker cannot guarantee approval. All finance facilities are subject to lender assessment, eligibility, and approval conditions.