What is Debtor Finance ?

Debtors Finance is a lending product that enables a business to unlock equity from their receivables. The product will not suit every industry however once the product is understood, it offers an alternative to traditional lending products and generally there is no personal guarantee required from the Directors of the company. Whilst there are many different names for debtor finance,the underlying principals are the same. Debtor Finance Sydney needs to understand your business and what you are trying to achieve. This may be to pay tax debt or expand the business or simply provide a cashflow injection to the business.

A lot of business use Debtor Finance to help pay Tax debt. If this is you, then contact us immediately.

HOW IT WORKS

80% of the value your outstanding invoices can be made available to you within 24 hours.

All lenders products vary and will have conditions and lending criteria, Debtor Finance Sydney knows and understands all the lenders requirements and has a matrix we follow outlining which lenders will suit each industry. For example,building & construction, transport, manufacturing, wholesale, labour hire or any other industry you can imagine.

Debtor Finance Sydney can even unlock cash from your stock . This is called inventory finance. Furthermore, a whole supply chain can be organised if you are an importer. This uses trade finance meaning the stock can be financed from the point it boards a vessel overseas until your customer purchses your goods. Sound interesting? Call 1300 306 240 and we will explain.

WORKING EXAMPLE 1 OF DEBTOR FINANC

You import children’s toys and import stuffed teddy bears from China.

You work out your manufacturing costs and build in your margins to land the boxes of toys into Australia. The 90 day period to transport the stock and clear customs into Australia can be financed. You can use the value of the stock you are importing into the country as you have a forwarding purchase order from a customer.

Your landing price for a box of product is $2,000 and you sell that box to retailers for $5,000. Your retailers usually pay you between 30 – 75 days later meaning you have cash tied up in that transaction and you can’t purchase any more stock for other customers until that invoice is paid.

Debtor finance will release 80% of your $5000 invoice amount, meaning you receive $4000 against the invoice within 24 hours (with the balance on full payment by the debtor within 90 days). Now you have $4,000 and you can immediately go and buy 2 boxes with your $4,000 and sell them for $10,000.

You can then receive $8,000 against this second invoice and you can buy four boxes of product and so on.

WORKING EXAMPLE 2 OF DEBTOR FINANCE

A transport company has a fleet partly under finance and there may be some equity still in the trucks. Debtor Finance can release extra equity from those assets depending on the valuation of those trucks. You also may have regular clientele, one off clients as well as freight forwarding for other transport companies.

You have been approached to take on extra runs meaning you need further trucks. With that comes extra wages and carrying more debtors under your credit terms. Debtors Finance means you can organise funding against your existing debtors book therefore enabling you to commence trading in a very short period of time.

As with the other example, you will receive 80% of an invoice amount within 24 hours.

WORKING EXAMPLE 3 OF DEBTOR FINANCE

Let us use your business as the third example and show you how this product will assist your business.