Debtor Finance versus Bank Over Draft. Is one better that the other.

Debtor Finance Facilities:

Factoring facilities in simple terms are not cheaper, but don’t require bricks and mortar security to ascertain. Banks takes months to establish, and often when the business grows, the bank wont increase the overdraft to stimulate that growth.

Factoring facilities can be setup in under 2 weeks. It can grow with your businesses success. Bank products are often cheaper, as most borrow from banks to lend. However with the right business strategies in place, business owners can use Invoice funding products to their advantage. This will keep their assets for other lending goals.

Example Client:

Recently a client wanted a 2 Million dollar facility in Invoice Discounting. The business owner had purchased Equipment with Westpac. Westpac placed on the business a fixed floating charge. They same owner also had a line of credit against their personal house. Bank of Qld had also put on a fixed and floating charge.

These charges cover every assets the business owner has if things go wrong. Not only did they take charge of the asset they lent against, they covered all other assets as well. Sneaky and unethical. Debtor funding in this case was denied. Both banks own the debtors of the company being an asset.

A recommendation about Finance:

Be warned cheaper facilities may be more costly then you think. Spend some money to get those contacts looked at by a solicitor. Having freedom to lend and grow your business is your primary goal. Don’t let financiers control that decision. Often lenders use those charges as a early warning devices. When another lenders completes a credit search they are aware. Financiers want to keep your business and make money of course. Banks use charges to keep other banks out.

Factoring companies only take two charges, the debtors and a personal guarantee.

Trade Debtor Finance Consultants is a family owned business which consults about 28 lenders in Australia. Our firm offering a no obligation, written quote at no direct cost to your firm. For more information, about Invoice finance and a range of products call us today.


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