In the finance world ‘factoring’ is often perceived as a dirty word. Factoring or Debtor finance, as it is also known, is financing invoices and getting paid for them in a couple of days instead of waiting 30, 60, or 90 days.
Factoring has been around for a long time. Often used as a method of last resort and therefore copping the blame for sending business owners broke. This product will highlight deficiencies in company procedures and if left unchecked will become a nightmare.
In some circumstances it can be a very costly exercise because they think factoring companies will give them cash flow and collect debts for them, often forgetting that they are finance companies and make their money from the interest borrowed.
Trade Debtor Finance Consultants was set up to offer businesses a free quote and consultation about these products. TDFC is here to answer those more difficult questions and if any of our lenders are chosen, we offer support for the life of the factoring facility at no direct cost to your firm.
Factoring is a very positive finance product if it is used to grow your business. It may not be as cheaply priced as a Line of Credit, or overdraft (which are normally set and secured by directors’ assets).
Factoring or Debtor Finance is often secured by one business asset, your debtors! borrowing against your debtors depends on the size of your receivables not your assets.
Factoring firms do credit checks, set limits, set exposures, and is the safety net for businesses looking for new clients. If you give a Factoring firm the new clients’ ABN number before you commence sales or work, they will conduct a credit search and set a limit assisting businesses with the application process.
As previously stated you don’t want factoring firms collecting invoices. They make their money of the length of time it takes them to be paid, so it’s always a conflict of interest. Keep the collections in-house, make sure you know the length of time it takes to be paid, and factor accordingly.
Trade Debtor Finance Consultants help you understand all the ins and outs of these products. We find the lender or lenders to suit your factoring requirements with just one call.
For a free quote or consultation on Factoring email us at: mail@tdfc.com.au or visit our website tradedebtorfinance.com.au
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