Surviving the credit crunch with debtor finance |
|
| Commercial Finance - Business and Commercial Loans Resources |
|
A major effect of the credit crunch is that businesses can no longer rely on banks for financing to help smooth out cash flow shortages. Many businesses are also finding that their customers are taking longer to pay for goods and services. If you are waiting 30, sometimes even 60 or 90 days to get paid by your customers, or if you are finding it difficult to get funding from your mortgage lender to grow and expand your business, than you should consider invoice finance or debtor finance (also called factoring and cash flow finance), which can provide your business with a flexible line of credit against unpaid invoices. Debtor finance or invoice financing essentially offers businesses access to a flexible, reliable and quick supply of working capital when needed, to improve cash flow and grow, pay wages or increase purchasing power which is free of the constraints commonly encountered with other forms of business finance (for example, overdrafts). Reasons why debtor finance is used • The business is not tied to the strict lending criteria of a bank • Provide greater certainty in managing day to day cash flow • Invoice finance is used if your business is growing and working capital is inadequate • The directors/shareholders want to fund the business based on business assets and not personal assets, eg property • The director/shareholders want to avoid introducing new equity partners which means losing control or sharing the profits Benefits of debtor finance • Invoice financing gives you more control over cash flow to better fund the business • Allows your business to expand by extending terms of trade • Invoices will be paid promptly, usually within 24-48 hours • There is no need to offer discounts to customers for early payment • Enables your business to meet wages and supplier payments on time • Better buying power with suppliers so you can take advantage of early settlement discounts and bulk discounts on purchases • Real estate security is not required Disadvantages of debtor finance • Your business still needs to maintain a good relationship with customers to ensure that terms of trade and credit application controls remain in place • The invoice finance lender may not fund the entire debtor's ledger - only those it approves as secure • Your business still bears the risk of bad debts It's important that businesses consider whether debtor finance, like with any form of business finance, is suitable to your business. If you would like more information about invoice finance or other forms of finance for business growth, speak to one of the mortgage brokers at Intellichoice. With access to over 20 mortgage lenders, we will be able to find a financial solution that suits your needs and circumstances. |
| Last Updated ( Monday, 29 March 2010 10:18 ) |
Speak to a mortgage broker today to find out how we can help you with all your home loans, invoice finance, bad credit home loans and owner builder finance needs. Our mortgage brokers have access to over 800 mortgage loan products and 35 mortgage lenders.
Many people have differing financial dreams and financial planning can assist you in meeting those goals. Our financial planners aim to help grow your wealth through real estate and other investments in a safe and cost-effective manner.
Ultimately, what every investor is seeking is a strong return on their investment and you can be assured that any property in Australia that we recommend, have been selected on the basis that they offer you the best possible returns for your dollar.