The most common method of debtor financing is called Factoring. This involves a business selling their invoices to a factor”(a third party). These are usually sold at a severely discounted rate, as the factor is taking on the risk attached to the debts not being honored. It is a common method for distressed companies to maintain a healthy flow of cash, regardless of their industry or size.
One of the key terms to understand is financing without recourse. This refers to a finance company bearing the loss of unpaid debts, while recourse allows the finance company to pursue the company they provided the finance for any unpaid debts. Obviously “without recourse” offers much more favorable terms to business looking for finance.
Getting approval for debtor finance increases a business’s chance of recovering from their cash flow problems. Without this finance, they would not be able to maintain the day to day running of their business. Debtor financing can ensure that companies can get instant access to cash flow, instead of having to wait for it to drip in from their debtors.
In addition to receiving a much needed injection of cash, the business owner is also relieved of the burden of chasing unpaid invoices. This saves a lot of time and effort that can now be used to increase the profitability of the business. Getting debtor finance is also far easier and faster than obtaining a business loan.
Debtor financing is a fast and effective way to reach your short term financial goals. Keeping a positive cash balance frees business owners from a lot of unnecessary worry and stress.
There are many debtor finance specialist locally, they use their vast experience in many different industries to process your application as quickly and efficiently as possible. Most have the ability to approve your application and deposit up to 80% of the funds in your account within 24 hours of your application. Once again much faster than a business loan would ever be approved. The fact that most of these companies operate independently of the larger financial institutions means that they can operate free from the red tape. You no longer have to worry about the indignity of begging a Bank manager for the funds. Once you have good credit, getting debtor financing should be a straightforward process.