This type of finance has been around for a very long time. This lending product has been offered by nearly 65 private lenders to Small and medium business successfully for the last 50 years. Factoring is also commonly known as Debtor Finance, and some firms use Invoice Discounting as well. The GFC has forced business to look at options beyond the basic banks. Continue reading
Invoice Discounting can be also be known as Factoring, Invoice Finance, and Debtor Finance. No matter what name they use, its getting an advance on outstanding debtors, so business owners can avoid cash flow issues in Growth.
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Anyone who has been in business know the struggles of customers who pay months later after the transaction. The pain comes especially when its for a debt that will really hurt your business if it isn’t ever paid. I’m sure you have your own battles that you are going through but I thought I would share mine.
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Most businesses invoice our their products or services on account. Normal terms are 30 days. This has been going on for generations. Most business owners rely heavily on credit in order to supply more product to an ever growing sales ledger. More you spend and pay back the more credit you receive.
Simple business really, until the credit drys up. All it takes is for one or two debtors to delay in paying and suddenly your cash flow starts to stress. Not being able to full fill future orders, pay bills on time is suddenly a big concern.
Cashing Invoices for Money
What if I told you that factoring or debtor finance lenders specialize in growth. Your facility grows with the amount of clients you have. As you become a larger client, lenders reduce their fees and extend finance rapidly. To avoid defaults, lenders conduct searches into credit back grounds of future clients to protect your investment. Also factoring lenders security is the invoices involved.
Ask yourself does overdraft, line of credit, or credit card facility do that? Often with bank facilities. If there is any delay in payment the whole system stops. This can be catastrophic to a business. Not with debtor finance facilities. Factoring staff work in with you to help pressure or pursue payments of slow paying debtors.
Fees, yes it will be more expensive that an overdraft or line of credit. However your ascertaining flexibility. Not only in the amount your drawing, but also flexibility in the facility should you grow. Often bank products take weeks for growth to happen, and it often depends on your equity in assets. Fees charged can be offset in growth or tax credits. Factoring if used correctly can be a weapon for success in business in a number of ways.
This is where Trade Debtor Finance Consultants comes in. Our firm offers a complete explanation of products and lenders. Finalizing with an obligation free written quote. If you choose to go with one of recommendations. We will give you support for the life of the loan if required. One call could change your businesses outlook for the future. Call us today 0460 448 955 or email accounts@tdfc.com.au.
Invoice Financing – Increases Cash Flow Using Your Unpaid Invoices
You have a business and your debtors take 30-60 days to pay. It’s not unusual as all the figures in collections show an average of 55 days. This cash is yours, but you don’t get it until your clients pay.
Your cash flow is on hold as these clients are using your firm as a bank. How can you grow your business with little money or cash flow to get those new clients?