Debtor Finance

One of the biggest finance issues for any small business or company is debtors so it makes sense to ensure that when it comes to debtor finance you choose a solution that truly serves its intended purpose – to reinject cash flow into your business.

During periods of strong sales growth, debtor levels often increase dramatically and with that, companies sometimes experience cash flow tightening and problems with liquidity. When that happens, traditional banking solutions like overdrafts often don’t offer the right solution for their needs.

Debtor Finance is also known as Receivable Financing, Invoice Financing, Invoice Discounting, Cash Flow Finance, and Factoring. It enables companies to secure flexible working capital from their accounts receivable/debtors.

It is used primarily to fund working capital but also has been used to fund management buy-outs and business acquisitions.

Here’s how Debtor Financing works

There are a variety of different factoring or debtor finance solutions designed to suit different types and sizes of businesses.  

One type of debtor financing works where the finance company advances you up to 80% of the face value of your unpaid invoices. The company secures collection of the debts on your behalf. When the invoices are paid you receive the remaining 20% minus charges. Alternatively, if you prefer to maintain control of the debt collection process in-house there are companies that will accommodate this type of debtor financing situation as well.

Who qualifies for Debtor Finance?

Debtor Financing or factoring may or may not be the right solution for your business.  Generally, it works for businesses that sell goods and services to other businesses on credit. To qualify for debtor financing borrowers need to have an established business and be experienced operators with good operating and credit procedures. They also need to be operating profitably.

It is offered to sole traders, family trusts, partnerships, both private and public companies.

Benefits of Debtor Finance

• The finance available grows in direct proportion to the growth of your business
• No requirement (usually) to use real estate as security.
• Far less restrictive than bank overdrafts which often have a fixed limit require security over property

As with any type of finance, there are a number of debtor financing options available in the marketplace. And because this type of financing requires taking control of your accounts receivable (and therefore your customers) it’s vital that the company and the type of debtor finance you choose, is reliable and is a great fit for your company’s growing needs. Talk to the team at Wealth Concerns and we can point you in the direction of a Receivables Financing company that offers that great fit. 

Contact Us

If you would like to discuss your specific circumstances call us on 1300 700 496 or alternatively text your name and number to 0411 320 962 and we will call you.