You have made a pass at the bank and they haven’t found you, or your company, attractive.  What do you do now?

You could go to Thailand for a nose job or liposuction, join a gym and work on weight loss and gain a six pack but that also needs money and that’s why you went to the bank in the first place.

It’s not that your company is in dire straits, you have a good product, you have good customers and good staff but what you are missing are sufficient, regular funds to move forward.

The solution is actually with your debtors and a “factoring”.  Factoring is also known as cash flow lending, debtor finance, invoice factoring and debt factoring, whichever name you are familiar with, they all mean cash flow.

There has been a misconception in Australia about factoring which stems from a time when it was seen as lenders of last resort.  This is definitely not the case.  In the UK it has a very high acceptance, where it has been a business fact of life for 400 years, has experienced steady growth over the last five years and employs over 5,000 people.

A recent article in a UK newspaper noted nearly half of all new businesses in the UK tax system fail within their first five years of operation.  With 61% of business owners saying they lack confidence in their ability to grow their business with three years of consecutive growth, what are the key factors inhibiting growth in the UK trading environment?

  • 44% of business owners state it’s the UK tax system,
  • 38% say it is the banks and lending,
  • 36% state costs, late payments and cash flow.

According to the Sydney Morning Herald ‘ Not only is debtor financing a great way to obtain working capital when there are few other options, the amount of funding available also increases as the business grows, which is a significant benefit compared to traditional bank solutions.

A simple statement of the benefits are—

Cash received quickly.  Even as a new client once your account is established with a Factor you could have your funds in 24 hours.

Steady cash flow enables business growth, now your debtors are taken care of, you can concentrate on running your business and invest back into your business.

Steady cash flow means you can purchase new equipment, new technology and hire more staff, again growing your business and all this without incurring debt.

Take away the concerns about customers paying on time and the need to offer discounts to ensure on-time payment and you aren’t impacting your profit margins.

Factoring is ideal for industries such as SME’s in wholesaling, distribution, manufacturing, temporary labour hire or transport.  Company turnover is usually between $20,000 pm and $500,000 pm (in receivables).

Remember a Factor is not a debt collection agency.

With nothing to lose and a lot to gain it makes sense to talk to a Factor and find out if you qualify for this type of finance.