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Debtor Finance – Improved Cash Flow

We source quality cost effective ‘Debtor Finance’  solutions from a number of specialized lenders. Take the fuss out of chasing your debtors. Leave it to our team to assist in freeing up your cash flow. As a result, you and your business can capitalize on opportunities. You can focus on growing your business.

Many small businesses looking to grow still find it challenging to access finance, particularly without providing real estate as security. Read more in Finance is Challenging for Australian Small Businesses.

What is Debtor Finance?

Debtor Finance is a generic description of a funding process based on the value of a business’ accounts receivable ledger.

You can use this facility if your business supplies products or services to other businesses on standard trade credit terms.

How does Debtor Finance work?

Debtor finance can be disclosed or undisclosed to your customers.

Debtor Finance is a full ledger facility. All invoices are subject to the debtor finance arrangement.

Invoice Financing is a selective invoicing facility. Invoice finance is a specific type of Debtor Finance. Instead of selling all your invoices you decide which invoices and when to sell.

Security requirements for Debtor Financing vary between lenders.  Requirements traditionally focus on:

  • The value of the debtor’s ledger
  • Specific assets
  • A charge or mortgage over the business
  • Personal guarantees of directors as collateral

Most Debtor Finance credit lines will automatically increase in response to increases in sales. Therefore it will provide ongoing working capital to fund the growth of the business.

The typical advance rate ranges from 70% of accounts receivable ledger value up to 90%. The remaining 30% to 10%, known as the ‘retention’ is released following receipt of payment of each invoice by the customer/debtor/buyer.

It is also sold as:

  • Invoice Discounting
  • Factoring
  • Cash Flow Finance
  • Asset Finance
  • Invoice Finance
  • Working Capital finance


Why would you use Debtor Finance?

  • The finance facility grows with your business
  • No real estate security required (unlike overdrafts)
  • The facility is self-liquidating. Consequently, your business is not taking on any additional debt
  • The facility is stand-alone. It is separate from your other Bank borrowings and Bank security
  • You have fast access to your debtor’s outstanding invoices. Get paid straight away. Don’t wait 30, 60 or 90 days.

Who would use Debtor Finance?

Certainly, any business may have a use for debtor finance. It is especially useful if you are in a growth phase.  Or if your debtors, for example, keep extending their payment terms to you.

The financier looks at the strength of the debtor rather than your business. The result is a streamlined credit approval process. The financier uses the invoices as security.


Finance percentage of the Debtors Invoice

In some cases up to 90% of the approved value of invoices (subject to credit approval*) can be financed, minus fees, within 24 hours of processing.


What security is generally required?

The financier uses the invoice as security. The financier takes a fixed charge over the Debtors of your business. In the majority of cases, you do not need to provide any other form of security. Therefore, you keep the other security free for other uses (such as property).

Check out our Commercial Finance Page for all our commercial finance options.

Contact Us to discuss how we can tailor the ideal Debtor Finance package for your business. Call 02 94530300.

*All applications are subject to the credit approval criteria being met.