What is Debtor Finance?
Debtor finance is a class of funding that allows businesses to overcome cash flow concerns. It is a smart way of getting your business the cash it requires to run, invest and expand.
Most companies that sell goods or services, must wait for their invoice to be paid, usually, between 30-90 days.
Waiting to receive these debtor payments can lead to a cash flow gap which may turn into a bigger problem especially if the business is unable to support itself from a series of regular outgoings and payment duties that can never be late such as wages, supplier bills, rent, energy costs and taxes and so on. Furthermore, the money tied up to these invoices could have been used to invest or produce goods and services for potential customers.
Debtor Finance is an easy alternative to receive cash from those invoices as soon as they are issued and keeping cash flowing.
What are the things you need to consider for Debtor Finance?
It’s better to have a few quality customers or a decent spread of quality customers than thousands of bad customers who don’t pay your invoices. You need to prove that they are creditworthy and that they’re pretty reliable and trustworthy.
Always strive to have a good relationship with your financier, you’d be amazed at the things that they’ll do for you to help push your deals through or push your invoice financing through.
There you have it, primary key structures to have a successful debtor finance facility in place for your business.
AR Cash Flow offer purchase order financing at competitive rates and can work in most industries in Australia and overseas
Need help fulfilling large sales orders? Ask AR Cash Flow.