The idea of using your customers’ unpaid debts as security to raise cash goes back to the time of Cleopatra.
It was the dominant form of business finance in the American colonies until the War of Independence.
In Australia, the industry is booming with a turnover of more than $60bn a year.
This form of business funding has been around for a long time. It is a recognized and proven strategy for any business with poor or lumpy cash flow whose owners require working capital be readily available to seize growth opportunities and pay bills.
Over all the years, the basic principle hasn’t changed. A business can use money owed by its customers to raise working capital. However, there are a number of innovations, such as single invoice finance, which have made it more relevant to a wider range of enterprises.
There are two main reasons a company will set up a debtor finance facility.
Sometimes a profitable and growing company needs working capital to fulfill a large order, but finds that its overdraft or line of credit is maxed out. In this situation, an invoice or debtor finance facility is a life saver. Watch this video to understand how you can boost your profits by factoring invoices.
All businesses experience cash flow problems particularly if customers are slow payers. Sometimes there are not enough funds in the bank to pay staff, meet a tax bill, cover overheads or meet unforeseen expenses. This is where a debtor finance facility comes into its own. It helps business owners punch through a temporary crisis and move on.
If your business success relies on regular and consistent cash flow it makes absolute sense to consider this reliable funding alternative. If you require more information you’ll find a huge amount of information on our home page or in this video: single invoice finance – how it works.