Others May Say You’re Risky, Find Out Why We Say You’re Worth It
If you have credit issues, is there any hope you will ever get approved for finance?
Its unlikely a bank will go near you so why would we take the risk?
In this video we will discuss the difference between a banks’ positioning and our own.
Watch below to find out if there is any hope after a bank rejection.
For an appointment with a product specialist call the office on 1300 652 158.
Daniel: Hi, I’m Daniel from AR Cash Flow, and today I’m here with Julia
and she has a question for us. What is it?
Julia: I do. Today I wanted to talk about, if a business has credit
issues already, do they have any hope of getting financed in the
future? So Daniel, why don’t you start with telling everybody
what would you define credit issues as?
Daniel: Credit issues, to me, mean that the company has not been
showing profits for the last few years, or they have an
explosion or a blow out in their payables, or they may have
skipped debts in the past and have some default judgments
Daniel: They’re the real things which I’m talking about.
Julia: Okay. Well, look, it’s no secret that if you do have credit
issues and you go to the bank, most times they’re going to say
no. Why is that?
Daniel: The main reason why banks . . .
Julia: Why don’t they want give people a second chance, basically?
Daniel: Well, it’s a good question, because what they say is, or what I
say is there a statistics point to this as well, is that the
future is but a reflection of the past. So if you haven’t been a
good performer in the past, generally, or more than generally,
probably 90% of the time, you’re not going to be a good
performer in the future.
Daniel: And the banks, when they lend, they’re usually taking property
as security. And if they’re taking property as security for a
facility that’s probably going to end up in default and the
client is going to go out of business eventually, they’ve got to
try and get that money back. If you’re trying to sell property
to collect out, it’s a 12-month process, most of the time, and
then at the end of the day you don’t know what that property is
going to sell for. So the asset you’re lending on is not very
close to cash.
Julia: Okay. All right. So we don’t rule out someone if they’ve had
credit issues. Why is that?
Daniel: With our type of finance, which is cash flow based finance, we
really look at the transactions that we’re financing, and
they’re usually short-term transactions. If you’re factoring off
financing and invoice, that’s usually a 45 day, on average, call
it a 45-day debt. So the money is going to be paid back in 45
days. So you can see that our asset is very, very close to cash,
whereas property is not.
Julia: Yes. But the banks, they offer debtor finance facilities.
Daniel: It’s a different type of product.
Daniel: They use a confidential facility, and it’s a discounting
Daniel: They generally don’t legally buy the invoices, and so . . .
Julia: Yes, and your requirement is still very different . . .
Daniel: Yes, that’s right. So if their client should go out of
business, they’ve still got credit issues around collecting
those debts and they’ve got priority payments, and because they
don’t do the level of auditing on the invoices, there’s a higher
risk of fraud and dispute on their invoices.
Julia: Okay. All right. So I guess, just to sum it up, the question
was: “Is there any hope of getting finance if I have credit
issues?” And the answer is yes. So, to discuss your deal, call
the office on the 1300 number.
Daniel: Thanks for watching.
Julia: Thank you.