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WHY DEBTOR FINANCE IS OFTEN THE SMARTEST OPTION

12-08-2015
by 
in 

Access to unsecured business funds can often be a challenge for SMEs.

Traditional bank funding, such as an overdraft, often requires personal property to be used as security, and current interest rates are luring many SME directors into drawing on equity in personal property to obtain additional funds.

These types of funding can often be limiting to business funding and growth. It is a static form of finance, and without additional security, limit increases can be difficult to obtain.

Debtor Finance on the other hand is a rolling line of credit for a business.

As a company’s sales grow, so does the level of funds available to them.

Once a company invoices their customer, they send a copy of the invoice to the financier, who will fund up to 80 percent of the value of the invoice within 24 hours.

When the customer makes payment on the invoice, the remaining 20 percent is made available.

The sharp fall in the Australian Dollar against the US Dollar has allowed for a gradual rise in exports, according to the latest ACCI-Westpac Survey of Industrial Trends.

The survey also showed an improvement in domestic demand, and so a combination of both has seen a steady lift in manufacturing output over the past year.  

Increased output typically leads to a requirement to hire additional staff, putting pressure on cashflow to keep up with wages.

The ACCI-Westpac Survey found a large number of respondents expected to increase their spending on plant and equipment over the coming 12 months, the strongest reading since 2011.

Access to funding for this investment can be difficult especially with available cashflow tied up in purchasing stock to keep up with increased demand and maintaining everyday expenses.

The latest Dun & Bradstreet's latest Trade Payments Analysis reported the Manufacturing industry is settling invoices on average in 48 days.

180 Group assists manufacturing companies to bridge the gap between payments and receivables, to give that extra cash injection to purchase plant and equipment, expand business premises and for new product development.

It can eliminate creditor pressure by negotiating early payment discounts along with maintaining ATO obligations.

180 Group recognises that every business is different, and therefore are able to tailor a solution to suit businesses’ needs.

Cash flow management dictates whether or not a business will be able to survive in an increasingly competitive market that has very tight margins.

As a company’s debtors are the only security required, Debtor Finance can often be used alongside other forms of lending to create a complementary funding solution for businesses.

 

180 Group

Ph: 1300 180 180

www.180group.com.au

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