What do banks need to ascertain finance for businesses?
1. Must have two year financials
2. Overdrafts and or Business loans must have property or assets
3. Directors with assets are desired giving personal guarantees strength
4. Director must have clean credit files
5. Business Tax must be up to date
So what happens if you don’t tick all these boxes? Do you go to non tier lenders paying larger interest rates, sacrificing profits margins? Finally how do you get the money back fast to save on that interest?
Factoring, Debtor Finance, Invoice Discounting Consultants in Australia.
Why Debtor Finance works.
Accountants, brokers, business coaches are never sure if a debtor finance product will work or not for your business. As a result they state it’s too expensive. Others say it’s simple, put your invoices in and get paid up to 80% of their value with 48 hours. The final 20% less fees is paid when your debtor pays for the invoice. there are two alternatives to poor cash flow. One is going broke waiting for debtors to pay. 2nd is demand for faster payment, hoping you don’t loose the contracts.
Trade Debtor Finance Consultants are now forming relations with accountants.
Consequently no matter if your a new business is a start up or your an established business. If your cash flow is not constantly coming in, your business growth is reduced. You abilities to generate discounts, create marketing, or put on staff will weigh heavily on your companies funds available. Factoring and Stock finance can be a life line to new business owners as they grow. Our firm offers the complete explanation about lenders who offer this Factoring stock Finance product. Continue reading →
Factoring, Debtor Finance, Invoice Discounting, Invoice Funding is a reliable business finance product!
We cant have a money tree, try factoring for cash flow growth with Factoring
All businesses wish they could all have their own money tree. It’s just not that simple.
Debtor Finance, Factoring, Invoice Discounting have all been exploited in the past for all the wrong reasons. Robbing Cash flow to pay behind payments or bad debt experiences has often given businesses and factoring lenders a bad experience . For Example: what happens when the company gets into financial trouble and the costs of the lender add up, or the lender puts their funding on stop for whatever reason. 5/10 businesses in this position say the factoring lender caused their business to fail.
When it comes to responsibility of bad decisions: Who signed up for the facility, who knew the costs, and who had the previous debt or problem before factoring. The owner did. Whether the owner was explained the product and its structures fully, we at Trade Debtor Finance Consultants Pty Ltd (TDFC) will never know. Regardless of that, the owner holds all the cards and often an incorrect decision becomes a futile error in this cash flow finance product.
If the Finance facility is operated and maintained properly and is correct for your business, it works.
TDFC has experienced staff to help you monitor the factoring lender and product to avoid any mishaps. They also have a large network of professionals to assist your business with any scenario. TDFC stand by service and if we don’t know we will use those contacts and endeavor to find a solutions for you, to make the correct decision.
Businesses need cash flow.
Another big statement is: owners say that their cash flow is great, we don’t need to debtor finance.
If you business is in that situation, of course you wouldn’t get a finance product. WRONG. This are the ultimate reasons for Invoice Discounting. Funding your invoices in advance of waiting to be paid, gives you the opportunity to push your business limits. Having the opportunity through Factoring, will give owners the ability to grow faster and strong more rapidly without security. You can place factoring costs in new job quotations . If you have more stock or staff you have the potential of more sales and growth. More growth means more profits and greater buying power.
The main alternative to Invoice Discounting or Factoring is the banks and overdrafts. You can go for that overdraft or line of credit, but in most cases its fixed lending and doesn’t grow when you do. Cheaper yes, but no flexibility can cost you jobs. Also securities of banks, can cost you equipment, and often banks take ownership of your accounts. Anything goes wrong, they put it all on hold. Most businesses are unaware of the security or power a bank has until its too late.
Debtor Finance is often secured by the debtors. It can be disclosed or undisclosed. You can have debtor insurance to help eliminate bad debt. It can be selective, it can be fixed fee, there are so many other versions available.
TDFC explains all the benefits of factoring and Invoice Discounting. TDFC has over 28 lenders and numerous products for you to choose from. With one call TDFC experienced staff members help you find the product and lender to suit your business needs.
Most businesses wait to bills or debts have added up and use Debtor Finance, Factoring, or Invoice Discounting as a last resort. Ultimately this is never easy to monitor or maintain as a large amount of your cash flow is used to catch up old debt. In over 50% of businesses, they say the Factoring funder is the cause of the plight of the company. A debtor finance consultant can help explain
How to use debtor finance properly
This is often not the case at all. If Invoice Discounting, Debtor Finance, Factoring, if used properly, in an effort to grow the business, the products success rate becomes over 90%. Cash Discounts or early payment discounts help offset the costs of the facility. Cash Flow increases productivity, helps promote more advertising, and could even help create more staff positions.
Using Cash flow for unpaid invoices being paid in 48 hours instead of waiting 48 days, also means putting extra staff on, creating more marketing and sales. It may also mean, purchasing a piece of machinery with the bulk payment, also creating more business.
This is the most important thing to remember. Invoice Discounting, Debtor Finance, or Factoring effect all businesses profit margin as it is a service cost. How this is absorbed into the business, depends on how the business uses the facility, and which facility it chooses.
Trade Debtor Finance Consultants Pty Ltd (TDFC) is made up of experienced consultants in all the debtor finance products. They know costs of each of the factoring facilities and have over 28 debtor finance lenders to choose from. Each debtor finance lender has different strengths and to suit different industries. Click here to see what Industries are suited to Factoring. TDFC also has single invoice funders, and can find Trade Finance that works in with Invoice Discounting.
Trade Debtor Finance Consultants would like to reveal some facts about Debtor Financing or factoring versus Overdraft Facilities. Price: 1.Overdrafts. There is no doubt that a commercial loan from a bank will be cheaper from any non bank lender. Continue reading →
Should I use factoring, or shouldn’t I. Debtor Finance is a product that was created to help stretch your cash flow in the sticky times.
For example: Slow paying debtors. Creditors who demand payment. Purchasing stock or equipment. Recruiting more staff. Wages paid weekly. Also having to pay any tax arrears, or just piece of mind. Continue reading →
Factoring is the oldest form of lending in the world. Clients conduct work or offer a service and with this Factoring finance facility, get paid straight away instead of waiting 30 days or more. Today in the modern world more clients are on line and have email systems running making invoicing nearly paperless. As a result funding is faster and more transparent.
Factoring by explanation means you provide completed invoices into a financier and get paid a percentage of that invoice in 48 hours not 48 days. Also not to be confused with Invoice Discounting.
This is how Debtor Finance works. You submit invoices and the lender verifies the work is complete, delivered etc. Once this has occurred you will be advanced up to 80% of the outstanding invoices into your bank account. Due to increases in your Cashflow, it will gives your company the ability to purchase stock or pay bills ahead of schedule. It may also possibly create discounts and offsetting the finance cost.
Once the invoices are being paid for, your debtor will pay the full amount into the lenders account. The lender receipts the invoice, taking out amount borrowed plus a fee and gives you back your final 20%.
$1000.00 (Factored) you get $800.00 in 48 hours of verification. Debtor pays $1000.00 to lender and they take out $800.00. You get final $200.00 less lender fee.
Most lenders vary slightly in fee setups. However Factoring normally involves a credit department, collection department, and some form of account management.
Due to the level of service offered, business will have to expect a service fee. Upfront fees are charged between 2-4%. This is sometimes called administration, service, or management fee. In addition, the secondary charge is interest. This taken out of the remainder of invoices less the lenders fees.
The amount you draw or borrow times by the number of days outstanding. Depending on the lender and its borrow costs from a bank, determines your interest rate charged.
Statics released from DIFA media release showed that Debtor Finance or Factoring is back on track and growing rapidly in Australia. These findings show that business owners are taking advantage of this type of facility to grow their businesses.
In Australia with the change in Government, new businesses are at their highest figures in years. Great thing about Factoring, they finance most Industries.
There is no better time to inquire about Factoring and how it can help your business grow. Therefore you have nothing to lose and everything to gain. It can start with a phone call for a chat, and end with an understanding of how products may work with your business. Continue reading →