Trade Finance Vs Debtor Finance – What You Need To Know

 In Daily Column, Trade & Inventory Finance

You order the chicken and get the fish instead!

Businesses beware! You may not be getting the financial assistance your business really needs. If you have an inventory/stock order and not enough funds to allocate for payment then you should be seeking Trade Finance. [blockquote]Some financiers may say that’s what they’re giving you, but when the paperwork’s signed sealed and delivered they may have just locked you into a Debtor Finance contract.[/blockquote]

The solution you need is not the payment of your invoices but the payment of your suppliers. You have a completely different cash flow problem that requires a tailored solution.

Why is it bad if your business requires Trade Finance and a financier gives you a Debtor Finance contract?

Well let’s brush up on what the difference is between Trade Finance vs Debtor Finance.

An Inventory Finance transaction takes places at the beginning of the sale process (purchasing stock orders etc) or cashflow cycle, rather than right at the end. Unlike Debtor Finance where the financier purchases your invoices for work already completed, the financier is purchasing stock for your business that hasn’t even been sold yet.

If you are having inventory problems, having a debtor finance solution is not going to help you as you need the funds for the beginning of your sales cycle. No point in funding invoices when you can’t even provide the product to your customers.

If you think you may be locked into a contract that isn’t right for your business and your cash flow problems still exist, if not getting worse, then perhaps you are the victim of the wrong cash flow solution.

For more information feel free to contact one of our product specialists on [icon style=”phone” color=”blue”]1300 652 158 or complete the form below:
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