Factoring versus Overdraft

Trade Debtor Finance Consultants would like to reveal some facts about Debtor Financing or factoring versus Overdraft Facilities. Price: 1.Overdrafts. There is no doubt that a commercial loan from a bank will be cheaper from any non bank lender.

Price:

1.Overdrafts. There is no doubt that a commercial loan from a bank will be cheaper from any non bank lender. So if you could access 100k overdraft you would only be paying a rate of up to 1% a month on that facility.

2.Factoring, Invoice Discounting lender would be making up to 2-3% a month for the same amount of funds.

Security:

  1. 1. are not often secured by just the business. They are requested that directors guarantee them. they also will take ownership of an asset (property of the director/s). If this is not available, the business assets. PPSA (Personal Properties Securities Act 2009) have to be signed for each asset secured.
  2. Factoring, Debtor Finance lenders only require the Directors guarantees, and debtors to sign authority of payment to the lender and PPSA be signed for control of the debtors.

Growth and Flexibility:

  1. Most business owners often grow quite rapidly, when they get access to more funds. With growth comes a need for more funds and banks just don’t, snap their fingers and the over draft is increased. This takes time and often if an owner has not foreseen this, the chance for growth passes. Frustrated owners, try to then seek other forms of finance, which in turn defeats the purpose of saving funds getting the overdraft in the first place. If there isn’t sufficient assets to increase, then the owner is stuck in once place.
  2. Invoice Discounting.  At the beginning of the facility setup, limits are set and costing established. In the same period, if an opportunity of growth is seen or starts to happen, owners contact the lender and raise limits. Lenders may or may not reduce rates, but often they do if a sizable adjustment in turnover is going to happen. This is all done within a few days via an account manager. Imagine if you missed doubling your turnover, because you couldn’t get access to more funds. No business owner would care about a rate increase, if they had the change to double turnover, and margins.

Setup paperwork and timings:

  1. Overdrafts. Often banks take considerable time to set up these facilities. They will need your business financials (at least two years), Assets and Liabilities, directors assets, and a strong business plan. Often it takes weeks for an answer, if that answer is no, then its time lost.
  2. Debtor Finance or Factoring lenders can have a facility set up in under 14 days. The reason its this long is because it takes the PPSA 14 days to be registered with ASIC. All you need to ascertain if your capable of getting a facility is a current debtors ledger, copy of some invoice to show your procedures, and a good spread of clients. To ascertain better facilities, you will need to provide financials of the last year, assets and Liabilities.

More Information:

Contact Trade Debtor Finance Consultants to help you get more information about our products. Hence TDFC offers in writing, with an obligation free quote, at no direct cost to your firm, up to 4 options in debtor finance. Therefore best of all we actively help you through the entire process, and support you, answering any questions you may have through the life of the loan.

 

Trade Debtor Finance Consultants helps you find the easy way to Factoring solutions at no upfront cost to you.
Trade Debtor Finance Consultants helps you find the easy way to Factoring solutions at no upfront cost to you.

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