Types of Debtor Finance and How They Work for You
‘Debtor finance’ is the common term used in Australia that encompasses a number of financial products. As a result these products finance your invoices. Subsequently meaning you can access a percentage of your outstanding payments within 24 hours. to inject immediate cash flow into your business. You get a source of cash to grow your business today and the remaining balance is provided when your customer pays their invoice.
The most common invoice-based debtor finance solutions are invoice factoring and invoice discounting. With these financial products, a lender will loan you the money from your invoices, with a range of payment structures available.
Where Does TDFC Come in?
Trade Debtor Finance Consultant is an obligation free consultancy service for small and medium businesses, helping you choose the debtor finance product best suited to your needs. We only charge the lender, so it costs you nothing to get the best advice for your business.
We’ll only ever refer you to a product or lender if it’s right for you and if debtor finance isn’t in your best interest, we’ll let you know and point you in another direction.
Types of Debtor Finance
Single Invoice Factoring
With Single Invoice Factoring, you provide one invoice to the lender and receive up to 90% of its funds as a loan. While this process has the highest fee charged per invoice, it also offers great flexibility, with no lock-in contracts and the freedom to select the single invoice you factor in the facility.
Therefore Partnership Factoring was designed for businesses with a Part-time bookkeeper or accountant. If you have a full-time accountant, there is no need for factoring companies to chase invoices, settle credit limits or manage accounts. With Partnership Factoring, you simply need to submit invoices and receive funding. The financier still provides credit checks, as well as some account management, but the majority of the finance facility in left in the client’s hands.
Invoice Discounting – For Medium to Large Companies
First of all this product is micromanaged by a bank. You need a full-time book keeper, financial division, and a very good accountant. This product is the top of the range in factoring. For example, Toyota would use this product. Can you remember this in our wording? This product they pay a service fee, for example, 10 million turnover 1% per invoice. They are given the chance to draw down the value of the invoice up to 90% concentration. Therefore only paying bank interest on what they have drawn down at an annual rate. This product is very difficult to ascertain as it’s a bank product. Not like third tier lending companies. So can you reword this product, please? If you would like me to better explain, give me a call.
Improve your cash flow by funding accounts receivable! Invoice discounting involves sending in your ledger. While being charged a service fee to access up to 80% of your unpaid funds. Once the funds are drawn, you pay commercial interest rates on those amounts until the invoices are paid. Invoice discounting can be disclosed or undisclosed. This means your debtors – the individuals you have invoiced – are either notified or not notified of the process.
Will Debtor Finance Suit My Business?
Hence if your business invoice debtors on terms. Invoices are funded once verification of is completed.
Due to a range of different products available, there will usually be a debtor finance solution to suit your business. You can trust TDFC to guide your business on its lending journey. And we only recommend products that will suit you and if it’s not in their best interests. In addition we will turn customers away if factoring doesn’t suit your business.
Some industries that may benefit from these products include:
Debtor financing for small and medium businesses can:
- so unlock outstanding funds to give you access today
- offer a range of flexible funding options with no lock-in contracts
- furthermore provide options for every type of business and every industry
- therefore help you grow your business now and into the future