Debtor Finance in Business Growth
We all know debtor payments can take time. If only there was a way to retrieve the money a debtor owes before the bill is paid. Enter debtor finance, an easy way to improve cash flow for your business!
What is Debtor Finance?
As your sales grow, you can gain access to the funds your customers owe you in outstanding invoices through this financial process. Your business can avail itself of about 90% of these funds before the debtor actually pays the account. The remaining 10% can be can be accessed once the customer pays the invoice. This entire process is called as Debtor finance or Cash flow finance. It may also be referred to as invoice factoring and invoice discounting.
The Significance of Debtor Finance
Debtor financing makes sure that an upcoming business does not suffer because of lack of capital. When customers place their orders, businesses need finance to fulfill those orders by purchasing the necessary machinery, raw materials, manpower and space. Debtor finance provides business owners cash against unpaid invoices so that they can complete the order without going through complicated, expensive banking procedures.
How it Works
The business owner has to submit the invoices to the financer, who inspects and verifies them. After successful verification, the applicant gets 90%of the amount of the invoice. The remaining amount can be obtained once the customer pays for the invoice.
Types of Debtor Finance
Invoice Factoring: The customer pays the outstanding amount directly to the financer. Therefore, the status of the finance is disclosed.
Invoice Discounting: The customer is not aware that the organization has received financial assistance and pays directly to them.
Macarthur Mortgage Finance can help you avail some of the best debtor finance in Australia. Contact us today so that you can sustain your business even before your customers have paid you.