Debtor Finance (Factoring) offers an alternative solution by providing one’s business with cash, by allowing one to raise finance from the unpaid invoices owed to him/her. This immediate flow of cash against the value of outstanding invoices can help improve one’s immediate business prospects and allow it to grow. The outstanding sales invoices could be the largest asset with up to one quarter of one’s business’s overall yearly turnover remaining unpaid at any one time. This “locked up” cash can greatly impact the growth potential of a business and has been known to force some small businesses into insolvency.
Factoring is the fastest growing form of commercial finance in Australia and is used mainly for working capital. Compared with the traditional overdraft style bank funding, there is no set monetary limit and doesn’t involve tying up the security value of one’s property. This finance is available to sole traders, partnerships, family trusts, propriety limited and publicly listed companies and is used in a variety of situations, though mainly for working capital. Other scenarios include support for business turn-around and as a line of funding in management buy-outs and business acquisitions.
At cash resources finance, Australia, it is recognized that cash flow is the life blood of any business: if it dries up, one’s business can fail. That is why securing and accelerating one’s cash flow is the most important objective of cash finance. Invoice discounting has proved to be a fast and highly cost-effective method of overcoming cash flow problems.
There are many benefits, not least that the finance available grows in line with business, and in most instances there is no requirement for real estate security. This compares very favorably with traditional overdraft style bank funding which tends to set a monetary limit linked to the security value in one’s property. For most established investors there are several issues with the major probably being avoiding cross collateralization while still maximizing their ability to negotiate discounts. These are usually through the major lenders and some of the larger second tier lenders using professional package loans. There can be a tradeoff between these two competing needs however recently more lenders are pricing maximum discounts without the requirement to cross the securities.
If one runs a corporate business and seeks Australian business loans in the Gold Coast, one might be able to get them but only if his/her corporate business still legally qualifies as a small business. Not all small business loans will consider a corporate business, so one has to be sure to note the eligibility requirements prior to applying. This immediate flow of cash against the value of outstanding invoices can help improve one’s immediate business prospects and allow it to grow. The outstanding sales invoices could be the largest asset with up to one quarter of one’s business’s overall yearly turnover remaining unpaid at any one time. Invoice discounting has proved to be a fast and highly cost-effective method of overcoming cash flow problems.