Even though debt factoring (also known as invoice and debtor finance) has been around for centuries many  business owners are embarrassed to admit to their customers that they use it.

Debt Factoring - Don't Tell My CustomersIt stems from a perception that a business which sells its unpaid invoices to raise working capital is poorly run or financially troubled.

That is rarely the case.

In most instances, debt factoring is a tool used by  business owners to capture opportunities and boost growth.


Debt factoring, in its various guises, has become a mainstream funding alternative.

Last year, the Australian industry turned over close to $62 billion dollars.

More than 6000 companies used their sales invoices to raise working capital.  Most of them strong companies on a growth trajectory.

According to the Debtor and Invoice Finance Association of Australia,  the industry experienced an 8-fold increase in turnover between 1999 and 2010.

Think about this:


Isn’t improving cash flow by turning unpaid invoices into immediate cash a more responsible way of doing business than shackling your small business with more debt?

Why should somebody put their family home at risk to raise working capital when a debtor finance arrangement,  which requires no property security, will do the job?

It doesn’t make sense and wisely thousands of Australian business people agree.

Front Foot

If you think your customers are likely to hold it against you because you sell invoices go on the front foot.

Dispel their prejudice and win them over to your way of thinking.

Tell them that you have chosen to employ an invoice finance company as one of your management tools.

If you are involved in a short-term single invoice finance arrangement explain that you are in control of the transactions and will determine when and how they occur.

If you have a long-term contract with an invoice discounter or factor point your customers to the figures showing how popular and effective this form of raising finance has become.

You might like to include on your invoices something along these lines:

“To assist in the responsible management of our business we, like thousands of other Australian companies, occasionally employ the services of a debt factoring company.”

You will be surprised to find, once you address this issue,  that many of your customers use these services themselves, or are very comfortable with what is involved because so many of their suppliers use it.