DEBTOR FINANCE

Debtor finance (also known as invoice financing) refers to the process of a company or individual borrowing money against the strength of their debtors or invoices.

This is usually a short-term finance solution to cash flow issues.

For many companies, both large and small, cash is tied up in stock or in debtors’ invoices not yet paid. Often a company has pressing needs such as payroll, salaries, Superann, more stock, renovations or ATO obligations. Often a company may wish to take advantage of Creditor/supplier discount for prompt invoice payment but not have the cashflow to do this.

Overdrafts can be an expensive way to fund a business given the unsecured nature and exacting bank conditions. However, by borrowing against the strength of debtors, a business can release cash often in under 24 hours. Up to 80% of the debtors can be advanced in cash and the remainder on payment of the invoices. The debt can be repaid within a year at competitive rates and so the cashflow problems can be solved.

Quick access to funds can be the lifeblood of a business. In addition, given recent restrictions and difficulties on business lending put in place by the major 4 banks, this has led to many small and even large companies struggling despite being profitable and commercially viable.

In Australia, and particularly among business in Brisbane and the Sunshine Coast, debtor financing has been a very popular method of financing urgent needs and helping business growth in need of working capital. This process grants you access to finance slow-paying invoices and frees up time and energy for expansion.