What Is Invoice and Debtor Finance? Borrowing Against Your Unpaid Invoices!

What Is Invoice & Debtor Finance

When running a business, the only thing that you need – as soon as possible – is the cash that your customers owe you. With invoices, you can wait for quite a while before your cash flow starts moving, so to speak.

Luckily, businesses can rely on invoice and debtor finance to have one thing less to worry about. Such forms of finance will help your business release cash from the outstanding customer invoices – the perfect solution for slow cash flow!

Let’s now take a closer look at invoice and debtor finance!

The Basics

Invoice finance, also known as factoring, is one of the oldest lending forms in the world. Basically, clients that offer a service or conduct certain work with a factoring finance facility will not have to wait 30 or more days for their payment – instead, they will be paid straight away by the lender

By definition, factoring means that you provide a financier with completed invoices and get paid a certain percentage of an invoice anywhere between 24 and 48 hours. We have a lender who can offer same day invoice & debtor finance!

Naturally, roughly the same aspects apply to companies that rely on invoice and debtor finance. Businesses with factoring will enjoy very fast access to working capital – the same working capital would be tied up in accounts receivable for as long as 60 days without factoring.

Cash Flow Improvement – The Main Advantage

As mentioned above, invoice and debtor finance improves cash flow and helps businesses get their hands on their money much sooner than they would if they waited for customers to pay up.

Debtor finance provides a budget for slow-paying invoices and accelerates a company’s revenues. In short, working capital and cash flow are improved, allowing for the payment of wages, suppliers, and any other expenses on time – or sooner than needed.

How Does Invoice & Debtor Finance Work?

When applying for invoice & debtor finance, you will have to choose between invoice factoring and discounting – whichever suits your company the best.

Invoice factoring, unlike discounting, is fit for small companies that don’t have yet established the collection and credit departments. Factoring finances the invoices individually – while discounting does so in a batch.

The factoring company will then advance the business 80% to 85% of the invoice’s value – this process will start as soon as the invoice is submitted. The remaining 15% to 20% – minus fees – will be advanced to the business when the customer pays their invoice in full.

Benefits of Invoice and Debtor Finance

1. Cash Flow Improvement

2. Financial Stability

3. Ability to Extend Payment Terms

4. Flexible Financing Facility

The Bottom Line

In short, if you have a small business that could use improvement to its cash flow, then invoice and debtor finance is the thing you should apply for. However, keep in mind that your business must be well organized and free of major tax and legal problems.

Other than that, you shouldn’t have any issues applying for invoice & debtor finance!

On the other hand, if you need information or have questions regarding home loans and such, then you can contact our office. We will guide you through the process of finding the best loan for your needs – even exceeding your current one! 

Feel free to reach out and contact us today – we’re more than happy to help you! Contact us on on 02 9121 6247 or submit your scenario online.

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