Debt factoring is an excellent alternative source of finance for businesses by significantly improving their cash flow. With debt factoring, a business can release immediate cash from their invoices with the help of a factoring company, instead of waiting for 30, 60, or even 90 days for their customers to pay.
Starting and operating a small business is rewarding and exciting, but it comes with a host of challenges that can’t be denied. From managing start-up and growth costs, marketing, finding customers, and creating positive cash flow, it’s no wonder that not all new businesses make it past their first few years – and no wonder many business owners lose sleep over it.
According to a recent article in the Financial Review banks have forgotten how to bank small business and have created a space for alternative lenders. “They are supposed to be a SME bank and say they understand business but only when it suits them. I’ve heard nothing from them, they’ve chewed me up, and spat me out after a quarter of a century”, according to an aggrieved ex long-term customer of the NAB.
If you’re struggling to create the cash flow necessary to hire a new employee, buy new equipment, ramp up production, or just not getting the support you need from your bank, you should seek alternative cash flow solutions such as debt factoring from an Australian factoring company. Debt factoring can be a flexible alternative to traditional business loans provided by restrictive banks who don’t always step up to help businesses when they need it most.
What are the alternatives to big banks?
As a small business owner, you owe it to yourself to explore the options that will help your business succeed. A variety of non-bank lenders have sprung up to fill the need left by legacy banks. Debt factoring is another solution.
Debt factoring gives you access to money you’ve already earned, but don’t yet have in your account because of outstanding invoices. If a client takes 30,60, or 90 days to pay an invoice, they’re sitting on your money for that long. It can take a strain on your cash flow when all your clients are taking a long time to pay. That is money – your money – you could use to fund your next growth project or simply to keep your business going. Instead of waiting for it to trickle in, you can use debt factoring to get most of it now.
How debt factoring can improve your cash flow
Positive cash flow can mean all the difference for your company. These are just a few of the ways debt factoring will change your business for the better:
- Create cash flow: With cash-in-hand, you can hire that new employee, expand your operations, or focus on growing your business.
- Manage slow payments: Debt factoring isn’t a loan. It’s simply giving you access to the money you’ve already earned, bridging the gap (of 30, 60, or even 90 days) between a successful sale and actual payment.
- Meet operating expenses and improve working capital: Working capital reflects your ability to take care of short-term debt and day-to-day operations. Small businesses haven’t always had the time to amass much working capital, and it can be a struggle to meet daily needs until your business gets on its feet. The cash you receive via debt factoring can help you stay on top of bills and negotiate discounts with your suppliers because you’re able to pay earlier or order in bulk.
How debt factoring works
Cash flow is one of the biggest problems faced by Australian businesses, and debt factoring can help solve it.
Debt factoring– also known as debtor finance, invoice finance, factoring, cash flow finance and invoice discounting can help improve your business cash flow by instantly unlocking the cash tied up in your accounts receivable.
By factoring outstanding invoices to factoring companies known as factors, businesses get paid immediately instead of waiting up to 90 days
Key Factors debt factoring service is flexible and fast, where invoices are often funded within 4 hours.
To get access to instant cash flow simply invoice your clients, select the invoices you would like funded and send Key Factors a copy. Key Factors will advance you up to 80% of the invoice value, in as quick as 4 hours. Once your client pays the invoice to Key Factors, we will credit you the remaining 20% less any accrued fees.
What invoices can be considered for debt factoring?
Invoices relating to business-to-business transactions can be considered, not consumer receivables.
Invoices that are still within normal trading terms not bad and doubtful debts.
Invoices for goods delivered and work fully completed, not progress claims.
Why Key Factors debt factoring?
Experience: With over 30 years of experience, we’ve become Australia’s leading factoring finance company and have ample happy customers to back it up.
Transparent fees: We are up-front about our fees and only charge a simple daily rate based on how much you use. We don’t charge any monthly or annual fees and don’t require property security or quarterly audits.
Flexibility: At Key Factors, there are no long-term contracts or minimum monthly factoring requirements. You decide which invoices you want to factor based on your cash flow needs.
Fast approval: When you apply to work with us, you’ll receive a response within 24 to 48 hours.
Our mission is to support our clients at every stage of their business, and we do it with flexibility, top-notch customer service, and a genuine desire to see small Australian businesses succeed.
Take a closer look at your relationship with your traditional bank. Is it serving you and your company, or is it time to consider alternatives like debt factoring? Whether your business is just getting started or is ready to take the next growth step, contact us – call us on 1300 884 100, email us, or complete our contact form and a friendly local cash flow expert will be in touch shortly.
We have offices in Perth, Sydney, Melbourne, and Brisbane, and we work with clients all over the country. No matter what type of business you are in or where you’re located, we can help you create the cash flow you need for your business to thrive.