 What is factoring?
Do you have clients that take 30, 50 or 60 days to pay their invoices?
Although having slow paying clients is expected in today’s business environment, they make managing cash flow a very difficult task. Paying suppliers, salaries and rent becomes a challenge.
However, there is a way to solve this problem. The solution can be debtor finance for your invoices.
Debtor finance is a financing tool that allows you to get your invoices paid in as little as 1 day. It provides your company with the necessary capital to operate the business, pay suppliers and grow. However, factoring is not a business loan. Rather, factoring involves selling your invoices at a discount for immediate cash. The factoring company waits to get paid, while you get immediate use of the funds.
Receivables finance can easily be integrated to any business and works as follows:
You deliver goods or services and invoice for them
You sell the invoice to the debtor finance company. They give you the first installment of 70% to 90% of your invoice. This is called the advance.
You get immediate funds to run your business
Once the customer pays the factoring company, you get the second installment (of 10% to 30%) and are charged a small fee for the transaction. This is called the rebate
One major advantage of accounts receivable finance is that it is easier to obtain than a business loan. Furthermore, the factoring line can be set up in about a week, and the biggest requirement for approval by a factoring company is that you do your business with credit worthy clients.
Small business factoring is easy to get
Do you:
- Own a business that sells products or services to mid size and large commercial clients?
- Have to wait 30 to 60 days to get paid?
- Have to turn business away because you can’t offer 30 day terms?
- Are at risk of missing rent, payroll or supplier payments?
- Make at least $1,000 in monthly revenues?
With small business factoring you can get money to:
- Pay rent
- Meet payroll
- Pay suppliers
- Capitalize on new opportunities - take on new clients
If you have an immediate cash flow funding requirement please feel free to call our office on 1300 652 158, enquire online or email info@arcashflow.com.au. We are here to help you.
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