Debtor Finance

In today’s world, the majority of businesses trading goods and services have to offer credit terms when invoicing – usually a payment period of 30 days. Although providing goods or services in lieu of payment can often encourage further orders, customers often expect credit terms when securing a service, which can present cash flow problems for the supplier. Research has shown that the average repayment period is closer to 60 days, regardless of the credit terms offered by a supplier, which can present even larger problems when a supplier has their own financial obligations to fulfil. If your business doesn’t have a significant capital reserve and is experiencing cash flow difficulties, then a form of debtor finance could be the solution to your problems.

Debtor finance comes in many different forms, all of which give businesses room to manoeuvre when times are tough. These include invoice factoring, invoice discounting, asset finance and cash-flow finance, and they’re all based on a business’s accounts receivables and their value as realisable assets. Debtor finance models like invoice factoring and invoice discounting treat outstanding accounts receivables as saleable assets. Their sale provides a business with an immediate cash injection without the need for further borrowing. Other types of debtor finance involve the acquisition of credit, usually in the form of a loan, which is secured against the company’s outstanding accounts receivables.

First National Money can arrange a variety of debtor finance packages, to suit the needs and circumstances of a wide range of clients. The transaction-based solutions of invoice factoring and invoice discounting are probably the most popular forms of debtor finance, as they are not as restrictive as an additional credit facility, and can also protect businesses from bad debt. However, debtor finance in the form of secured loans can also be a prudent option, as they are based upon accounts receivables alone, rather than the credit rating of the company. Loans like this can even be obtained by businesses with a poor credit history, which is particularly attractive to any business with a low cash reserve. If your business is experiencing cash flow difficulties, call First National Money today to explore the wealth of options available to you. Our team of experts will be more than happy to provide help and advice, making sure that you secure the right type of debtor finance for your business needs.