Debtor Finance can be also be known as Factoring, Invoice Finance, and Invoice discounting. No matter what name they use. Its getting an advance on outstanding debtors. As a result many business owners can avoid cash flow issues in Growth.
Debtor Finance is not a collection agency. Furthermore you can’t finance or lender will not collect on bad debt!
Debtor Finance companies, advance a percentage of the invoice. Normally up to 80%. This is for one main reason. There is a reserve of 20% not funded on each invoice. This will give lenders the chance to secure against any discrepancies or non payments.
Debtor Finance can be a strong source of cash flow for growth. Imagine if you could get access to 80% of your debtor book in 24-48 hours.
This could give you an advantage in the following areas of business.
Better buying power. Putting on more staff. Paying bills ahead of time for discounts. And or flood the market with your products for extra growth.
Debtor Finance is more expensive than traditional bank lending. However you pay for risk. Bank lending is often ridged and doesn’t move fast with your growth. Also bank’s wont look at a business under two years old. In conclusion banks often need security of property in most cases, and takes a long time to get organised.
Debtor Finance needs only a debtors ledger to finance. consequently you will have facility with verified completed work and more than 3 debtors. With the following in mind, factor lenders will look at new or old businesses. Finally will look at businesses with tax arrears. Owners with no securities are not a problem. Factoring does cover most industries.
Debtor finance pricing.
Price wise, Debtor Finance works out to be around 3% per month. So organising of growth and margins is essential. Most business owners agree, that in order to grow they need money, to sacrifice some margin to get bigger is never the issue.
Debtor Finance is not a facility to run your business for you. It asks for reports at the end of the month for reconciliations, it liaises with owners on new debtors and debtor limits, and assists sometimes in collection of larger debts.
Debtor Finance can be a very powerful tool in business if used correctly.
Trade Debtor Finance Consultants has been around since 2009 with 28 different lenders to choose from. Best of all you will receive an obligation free quote, in writing, with up to 4 options that suit your business, at no direct cost to your firm. Want to find out more about Debtor Finance, speak to the experts today.