Managing Cash Flow without Using Property Security

Debtor Finance, Trade Finance and No Property Finance Solutions:

The number one statement made to us throughout this summer by those seeking finance for their business has been “I don¹t have any property security” closely followed by “I have property but I don¹t want to put it up.” I suspect that often the latter statement could have applied when we were given the former.

Not surprisingly, DEBTOR FINANCE (also known as invoice funding or factoring) combined with TRADE FINANCE have been very popular solutions for clients.  

So what is it?

Debtor finance quite simply, is a line of credit linked to and secured by your outstanding accounts receivable (your invoices). If your business provides products or services to other businesses on standard trade terms (eg your customer is expected to pay you in 30 days or some other variation of time) debtor finance can help by providing the cash flow needed to run the business until the invoice is paid. Once approved you have a pre-determined limit available to you and you can use as little or as much as you need and only pay interest on the part you use.

Sounds just like an overdraft doesn’t it – just without your property on the line.

Who is it for?

Amongst others, this month we¹ve secured offers for a recruitment company that invoices out to corporate organisations where their temps are working. They have to pay their temps wages before their corporate clients pay their invoices. Debtor finance provides the cash flow so the temps are paid without stress and they can maintain their marketing and BDM activity because they¹re not hampered by an ever shrinking level of cash while they wait for payment. It also means they can pitch for big number solutions without wondering how they’re going to cover their costs.

Growing pains are gone!

We helped a professional consulting company going through AMAZING growth. They are now opening offices overseas and we showed them a way to leverage their success at winning new clients. The solution we facilitated for them means they can continue to hire new staff and can continue their expansion AND maintain their phenomenal service levels. What makes this even better? Because their industry standard is to bill up front, they can invoice in arrears, get their money upfront AND have instant competitive advantage and point of difference over their entire industry. It¹s a strategy that has them on top of their market instantly. 

Think this might be for small limits but not for bigger business; how about a $3M limit secured for a food provider supplying Coles, Woolworths and Aldi nationally on 180 day terms and turning over $20 million annually? This product is as big or as small as you need it to be and grows with you as your business grows (even overseas).

So who else does this work for?  

Professional services companies like marketing companies, and agencies. Recruitment companies and labour hire business. Suppliers to other businesses. Builders and tradies subbing to other businesses. The key questions are do you (or for our referrers reading this, do your clients) invoice in arrears and are your clients businesses?

If the answer is yes, we can help business be done better, grow faster and compete harder.

It¹s a winner and one of the best funding products for the B2B market available. 

Handy hint: not all of the majors are offering this, and those that do, are white labelling the industries best suppliers of debtor finance solutions.

Got a cash flow headache or need a finance solution? Call Jeff on 0439 062 771 or email at jeffsuter@darkhorsefinancial.com.au

Please note that finance solutions are to approved clients only and this article should in no way be considered professional advice.

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