What is Debtor Finance?

Debtor finance is another term for invoice finance. It can also be called invoice factoring, invoice discounting, or accounts receivable finance. Put simply, it allows you to improve your business cash flow by accessing a percentage of the value of your unpaid sales invoices in the form of a cash advance. The invoices themselves act as security. That is, no real estate security is required. This allows your business to get paid quickly.

How does it work?

Simply send your invoices to the debtor finance firm. The debtor finance firm will provide an agreed-on percentage cash advance of the invoices to your business, usually 80%, generally within 24 hours of confirmation of the invoices being received. Your customers pay the money owed on the invoices directly to the debtor finance firm. Once your customer’s invoice payments are received, the debtor invoice firm provides your business with the remaining invoice balance, known as a rebate, less any fees for the finance service offered.

 

What are the benefits?

It means you do not need to wait for the payment of your invoices. You can unlock most of the money quickly and easily, providing you with positive cash flow for immediate business expenses and/or business investment and growth. Another benefit is that you do not need to go through a bank for a line of credit which can take weeks for the approval of money you need for your business now.

What is the cost?

The cost varies and is dependent on the size of your invoices, the quantity of invoices, the duration of your invoices, and the quality of your customers.

Debtor finance is a great solution for small to mid-sized businesses wanting access to the working capital they need to cover their expenses. Contact us today for an obligation-free discussion to see how we can help your business prosper.

3 Quick Tips to Improve Business Cash Flow

Business growth is an exciting time for any entrepreneur. However, sustaining positive cash flow may be easier said than done though the normal ups and downs of the business cycle, such as seasonal events, and long invoice payment terms, to name a few. However, there are always ways to improve your business cash flow.

Here are 3 quick tips to improve your business cash flow:

1. Review old equipment and inventory

Looking at options for equipment finance and/or asset rentals can be cost-effective, and dependant on the circumstance, it can increase your speed and efficiency to increase production, or take on new projects, which leads to more incoming cash flow. There will also be money saved with not having to manage and organise for repairs, as you’ll always have the latest technology. Why not seize the opportunity during current historic low interest rates! 

2. Consider invoice factoring

Even if you have incentives in place for your customers to pay their invoices quickly, be it by giving discounts, offering online payment options, or enforcing late fees, the invoice payment terms can still place a delay on money owing to your business for products or services completed. This can place a crunch on the cash flow you need now to meet wages, new equipment, or growth. 

This is where invoice factoring enters as a solution, allowing your business to access a large percentage of the funds held in your unpaid sales invoices. You simply forward your invoices to the factoring firm in exchange for a cash advance, and the factoring firm now owns the invoices and is paid when it collects from your customers. Imagine what you could do tomorrow, if you got paid today, for the work you did yesterday!

3. Customer Loyalty

Your customers returning is key to business cash flow and growth. The above two points can certainly play into their customer satisfaction. If you present as a quick and efficient business with the latest technology, who also offers unique invoice financing solutions for your customer’s (and your) benefit, it can lead to a win/win scenario. Your loyal customers will also turn into an advocate of your brand which will bring in even more business. 

Being strategic about your business will improve your cash flow. The normal ups and downs of the business cycle will always be there, but the pressure will be less with a positive cash flow solution in place. Contact us today obligation-free for a cash flow solution for your business.