Three Debtor Finance & Factoring Misconceptions Revealed

 In Ask The Experts, Debtor Finance, Invoice Factoring

Often if you ask someone about their take on Debtor Finance they will respond with a few misguided ‘perceptions’ or for better word ‘misconceptions’.

I’m going to talk about those today and shed some light.

So let’s start with the biggie.

‘Misconception #1’

The opinion that Debtor Finance is a type of facility put in place when a business is about to go under, the final means to an end, the nail in the coffin. However that is not always the case. In fact here at AR most of our clients are thriving and growing SMEs and our finance facility is helping them develop even further.

We have facilities in place purely to help start ups on the rise and we also develop finance facilities to help business stay afloat and complete large transaction were funding would normally not be available. It is after all an ongoing cash flow solution.

Yes some businesses may go under even with a Debtor Finance facility in place but that really depends on the state in which the business is in once they come to us even with us managing their cash flow.

‘Misconception #2’

Another misconception is that Debtor finance is way too expensive and the fees are like highway robbery – If you’re going to borrow money lets face it there is always going to be some sort of fee associated with this, particularly with Debtor finance, as we don’t ask to secure any property from you so funding your business is much more risky for us. However in saying that, Debtor Finance rates are not much more than what a bank would charge.

‘Misconception #3’

And the final misconception of the day – Using Debtor finance will mess with your customers by getting overly involved and turn them off. That isn’t the case. There is an option to have either a disclosed or un-disclosed facility. In any event even if it is disclosed, we don’t do debt collection, you still maintain your most valuable asset – Your relationship with your customer. Plus if we do chase your customers it’s really only for your benefit.


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