As regular business overdrafts and loans are increasingly tough to obtain from financiers and debtors are taking longer to pay invoices, debtor finance is enjoying a surge in applications as small business owners scramble to gain access to short term cash flow.
A September survey by the Institute of Factors and Discounters shows the turnover in debtor finance rose 19 per cent to $16.4 billion year on year. In debtor finance, a financier or cash flow finance provider will advance up to 80 per cent, less a small financing cost. Once the invoices are repaid by the debtor the remaining 20 per cent is paid back to the client.
AR Cash Flow is seeing a surge in the amount of wholesalers and manufacturing businesses needing debtor finance. Assistance in collection of invoices is also a top priority for most clients and credit management to ensure they are doing business with credit worthy customers, keeping a close watch on the amount of credit extended to each customer.