Debtor/Invoice Finance
Arrangement whereby a financial institution provides finance secured by a company’s accounts receivable/debtors. An agreed percentage of the total debtor’s amount is lent. The Borrower company collects the debt.
Debtor/Invoice Finance is best used by small companies with reliable debtors such as large A rated companies or Government – many of whom are slow but reliable with payments.
Unlike traditional business loans, Debtor/Invoice Finance enables a business to borrow against the strength of its debtors – rather than being constrained by the borrowing capacity of ‘bricks & mortar” security. For example this is particularly good for service businesses which have steady or growing sales and quality customers but no significant physical assets.
Debtor/Invoice Finance can provide you with up to 80% of your debtor’s ledger value advanced to you as cash on an ongoing basis. This is the equivalent of having the majority of your invoices paid on the day you issue them. Businesses can typically access cash on the same day as they issue the invoice once the facility has been established. Because Debtor/Invoice Finance is provided on a confidential basis your customers will not be aware that a bank is involved.
Debtor/Invoice Finance is a flexible and viable solution for any business with a sound customer base experiencing cash-flow pressure, either through rapid growth or slow payment.
The Main Advantages
The main advantages of Debtor/Invoice Finance are its confidentiality vis a vis customer relationships and its reliance on sales and cash flow patterns rather than “bricks and mortar” security.
BizExchange understands that whether you are buying or selling a business, business financing is a likely consideration. We also know that finding the right person at the bank to deal with your issues is not always as easy as it should be.
This is why we have established relationships with a range of financial providers so that you can complete one form and have it received by the right person at each of the institutions you have nominated. Not only that, we know their lending criteria, so we will only present you with the banks that are prepared to consider your application.
