One Proven Way To Drive Down Your Trade And Debtor Finance Costs

 In Cash Flow, Debtor Finance, Invoice Factoring, Invoice Finance, Purchase Order Finance, Trade & Inventory Finance

How do you keep more money in your business? First step is not to give it away.

In this video you will learn:

  • How you can drive down finance costs in your business
  • How to get the most out of your financier
  • How certain types of cash flow financing solutions can end up costing you more

Call the office on 1300 652 158 to book in an appointment with a Product Specialist.

Watch the Video, look at the Diagram and/or read the transcript below


Daniel:             Hi everybody, I’m Daniel from AR Cash Flow. Today, back by popular demand, we’ve got Julia. What are we covering today?

Julia:                Today, we’re going to talk about funding one-off invoices. It’s something we don’t do, and I get asked a lot why, so today I thought we’d go into a bit of detail as to why, because there is some method behind our madness. We prefer a medium to long-term relationship. So let’s start with, what is that? Do you want to explain?

Daniel:             From our point of view, a minimum relationship period is 12 months.

Julia:                Yep. Pretty standard.

Daniel:             That’s pretty standard. We don’t do one-offs. Twelve months, we like it to start at, and hopefully it lasts for a few years.

Julia:                All right. So what are the main reasons, and let’s start with the risk, that we don’t do one-offs?

Daniel:             Yeah. The first main reason is really from a client’s point of view and what’s in it for them. We say risk, but really it’s delivery risk.

Julia:                Yeah.

Daniel:             So, if you have a longer term relationship, you usually start off small with your facility and you work it up to a bigger size.

Julia:                Yes.

Daniel:             And then when you put in that special order that you really need funded and it’s got all that profit in it, there’s much less risk the financier is not going to deliver on that. From our point of view, certainly, we don’t want to be putting a million dollars out the door on one client who we don’t know and we have never dealt with before. We want to work our way up to that.

Julia:                Absolutely. Okay, great. Let’s move on to due diligence.

Daniel:             What do I mean by due diligence?

Julia:                Yes.

Daniel:             Okay. Due diligence, if you’re doing a one-off invoice or a one . . .

Julia:                He’s carrying a magnifying glass by the way. It’s not a microphone.

Daniel:             If we’re doing a one-off invoice or a long-term contract or a long-term relationship, the amount of due diligence on the client, on the debtors, on the manufacturer is pretty much very similar.

Julia:                Yes.

Daniel:             So, if we’re going to do all that work for you and you’re going to do all that work assisting us to do that due diligence, it may as well be an ongoing thing.

Julia:                Yes. By the time you’ve done all that work and the time that it takes and all that, they may as well of just gone and got a loan, if it’s just a one-off thing that they want from . . .

Daniel:             Uncle Buck.

Julia:                . . . Uncle Bob or something.

Daniel:             Uncle Buck.

Julia:                Uncle Buck. Okay, great. So let’s move on to investment. What did you mean by that?

Daniel:             Actually, I just spoke a bit forward here, investment number three and four account setup are kind of similar.

Julia:                Yeah.

Daniel:             When you put a facility in place, it’s usually non-collateralised, which means it’s not generally property backed. So the amount of due diligence we have to do and the systems we have to put in place and learn the systems and processes that your company has to put in place is a bit of an investment of time and resources by all parties.

Julia:                Yeah.

Daniel:             So, if you’re just going to do a one-off, then it’s . . .

Julia:                It’s not really worth your while.

Daniel:             . . . it’s very expensive, and what’s your company’s time worth?

Julia:                Good point. Okay. Well, let’s get on to the big thing that everyone’s always worried about, pricing.

Daniel:             Okay. This is the most important question, the most important point, pricing. If we have an ongoing relationship and we’re going to be doing financing a number of orders, a number of purchase orders, a number of invoices, we are able to spread this cost over a longer period, which effectively pushes down the pricing on a per transaction basis.

Julia:                Okay.

Daniel:             Which is massive. If you’re going to do a one-off, I know there are spot factors out there who buy one-off invoices. If you’re going to do one invoice, it is a serious multiple of the price of doing it, on a per transaction basis, on a longer term relationship.

Julia:                Okay. That’s a really important point. Okay. So, final thing, security.

Daniel:             Yeah. What I mean by security, this kind of is related to point one. Security is security in the knowledge that you’ve got a financier backing you there for the next, at least, 12 months. If you go and do a spot factoring deal or a spot financing deal . . .

Julia:                Who’s to say it’s not going to happen to you again and you’re going to need the funds?

Daniel:             Exactly. So you might draw down once, and then if the financier is not committed to you and you’re not committed to them, then the next time you need to use them, they may not have the money or they may not want to do the deal. At least, when you’ve got this commitment from the funder and we’ve got that commitment from the client, it’s a symbiotic relationship if you like.

Julia:                Yeah.

Daniel:             Then you have that security of knowing you put your order in, you put your invoice in, and the funds are going to be there. You know how the processes work. You know the financier. They know your clients, they know your suppliers, they know everything. So that’s really what the security is about.

Julia:                Great. It’s an ongoing cash flow solution I guess.

Daniel:             Yeah, that’s right.

Julia:                All right. Well, that’s all I wanted to know today. Thanks, Daniel.

Daniel:             You’re welcome. For more information, check out our Facebook page at ARCashFflow . . . hang on, what is it?

Julia:                Facebook/ARCashFlowTrade, isn’t it?

Daniel:             No. It’s

Julia:                Yeah, that’s what I said.

Daniel:             Oh, is that what you said?

Julia:                Yeah.

Daniel:             Okay, never mind. Otherwise, if you’d like an appointment, please call our 1300 number, and Julia would be glad to set that for you.

Julia:                Yes. Thanks guys.

Daniel:             Thanks for watching.


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