Small business take on debtor finance

As regular business overdrafts and loans are increasingly tough to obtain from financiers and debtors are taking longer to pay invoices, debtor finance is enjoying a surge in applications as small business owners scramble to gain access to short term cash flow.

A September survey by the Institute of Factors and Discounters shows the turnover in debtor finance rose 19 per cent to $16.4 billion year on year. In debtor finance, a financier or cash flow finance provider will advance up to 80 per cent, less a small financing cost. Once the invoices are repaid by the debtor the remaining 20 per cent is paid back to the client. 

AR Cash Flow is seeing a surge in the amount of wholesalers and manufacturing businesses needing debtor finance. Assistance in collection of invoices is also a top priority for most clients and credit management to ensure they are doing business with credit worthy customers, keeping a close watch on the amount of credit extended to each customer.