Why Your Debtors Book Could Be Worth $1m Per Month
I can’t believe the Federal election’s still not over. It’s like being stuck in front of your grandmother’s favorite TV show when you were a kid.
Remember sitting there almost comatose and praying for it to end? The worst part for me was that my Grandmother spent most of her time getting up to make tea and talk with friends on the phone. Objecting was futile. It was always met with a smile and a “please be quiet dear, I’m on the phone.”
So with no end in sight, one can only make suppositions. One thing that I think would be a good idea is the Coalition’s promise to put the small business minister in Cabinet. Surely, this has to be a step forward, and why Labor didn’t at least match the commitment is beyond me.
As for the Coalition’s goal to improve lending to SMEs by making it easier and cheaper to use property as security…I say:”Good luck!”
There’s one thing that nearly every broker I talk to agrees upon, post GFC, banks have tightened lending criteria to SMEs and there’s no turning back. This is partially due to the fact that pre GFC they were a bit loose. So, the most SMEs can probably look forward to is a rate alignment with residential borrowers.
AT AR, we’ve certainly had more calls over the last six months from SMEs looking for funding without fixed assets than in the past. Most invoice financiers won’t touch these deals, it’s far too risky. We will, but the debtors have to be solid gold.
We’ll also factor businesses with only one or two clients. This is another area most invoice financiers won’t play in. Again, we will, but the debtors have to be robust.
Which brings me temporarily to a completely different point. Debtor finance, invoice finance, factoring and accounts receivables financing are all the same thing. It used to confuse me when I first started in the business, so I hope this helps someone else get a grip on the nomenclature.
Getting back on point, the upsurge in inquiries has meant we’ve had to increase our lending cap to accommodate market demand. Our facilities now range between $50,000-$1,000,000.
It might be nice if Tony got in and changed banking regulations but I wouldn’t be holding my breath.