What is Cash Flow Finance or Debtor Finance?
- A flexible source of working capital for small to medium businesses
- Advances you up to 80% of invoice value within 24 hours of the invoice being raised
- An alternative to the traditional overdraft. Bricks and mortar security is not required
- A source of finance that grows as the business grows, using today’s sales to fund tomorrow’s growth
What are the benefits of Cash Flow Finance?
- Provides immediate funds for growth
- Sits alongside existing business finance facilities
- Allows creditors to be paid faster, earning prompt payment discounts
- Means that GST obligations can be met on time
- Removes real estate from supporting business debt
When can Cash Flow Finance Help?
- To facilitate a Management Buyout, Partnership break-up, Acquisition or financial restructuring
- Opportunity to expand exists but the business is short of the necessary capital to take advantage
- Additional equity in fixed assets is insufficient or not available
- When the business has a large working capital requirement for stock and/or wages
What does it cost?
All business decisions should be made with a cost benefit mindset. If the desired result can be achieved then the cost is worthwhile. This is true of Debtor Finance. The cost of debtor finance is generally higher than a traditional bricks and mortar secured facility, though when compared to the cost of offering early settlement discounts e.g. 5% for 14 day settlement, it is extremely cost effective. It may also be the mechanism that enables the business to move to another level.
What sort of business is suitable?
- Businesses providing tangible goods or services to trade debtors on credit terms
- SMEs in wholesaling, distribution, manufacturing, labour hire etc with annual sales in the range of $300k to$20million
- Debts free of progress claims, contractual terms and penalties
Key feature
- Suitable for business with trade receivables and an annual sales turnover of $400k or more
- Facility size $20k up to $5million
- Suitable for wholesale, manufacturing, importing, labour hire, transport, and more
- Type of transactions include invoices to customers who have an ABN (B2B, etc)
- Property security the exception, not the rule.