Debtor finance facilities enable businesses to raise funds against outstanding invoices so that cash flow is not stifled by having to wait 30,45 or 60 days for customers to pay. The typical advance rate is 75% to 85%, payable within 24 hours with the remaining balance less fees paid across as invoices are collected.
How will it help my business?
It provides working capital for growth, enabling businesses to fulfil more orders or take advantage of early payment discounts to boost profitability, as well as the option to outsource collections and general sales ledger administration.
What does it cost?
There are two main costs, the first being the discount fee payable on balances outstanding (similar to interest on a bank overdraft) and an administration fee which is usually between 0.25% and 1.5% dependent upon turnover.
What will my customers think?
Your customers will probably be familiar with the benefits of debtor finance already as it is the fastest growing form of commercial finance throughout Australia and the rest of the world. It is used predominantly by growing businesses and as such it is beginning to be recognised as a sign of successful trading.
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