Finance products which utilize a company‘s debtors as security such as Debtor Finance and Factoring are excellent ways to fund a business with a strong growth story.
While many companies still rely on the traditional forms of asset-based finance such as overdrafts or term loans, they are simply unaware of the alternatives. Debtor Finance and Factoring are forms of finance which allow business owners to use their accounts receivables or invoices to gain quick access to cashflow.
Without a doubt, cash is king and the tight financial liquidity makes it fundamentally difficult for businesses.
Debtor Finance is a confidential form of factoring with the end user unaware that a finance company is involved, whilst Factoring allows the finance company to fully manage the collection process. On a company‘s balance sheet, unpaid invoices are viewed as debtors. Using these products a business can typically receive immediate access to cash of up to 80% (or 90% in some cases), of the face value of their debtors alleviating a lot of cashflow pressures from waiting to be paid.
The Debtor Finance product is perfect for more established companies who are experiencing growth or seasonal constraints and want to maximize the amount of cash they can borrow against their business assets.
The Factoring product is ideal for the smaller less established business that requires immediate access and can benefit from outsourcing the day to-day management of the debtors ledger, so precious time is not wasted chasing customer payments.