Debt Factoring allows businesses access funds owed to them before it is paid by the debtor. It’s a way for businesses to access most of the money owed to them in their outstanding invoices and receive the rest when the customer pays.
How does debt factoring work?
Businesses that are in need of quick access to cash can sell their accounts receivables at a discounted rate for a fast injection of cash. Debt factoring allows businesses to continue their day-to-day operations without worrying about limited cashflow.
Invoices are forwarded to the factor like Key Factors who then provides up to 80 per cent on the face value of the invoice within 4 hours to the business to access as necessary. When the invoice is paid in full to the factor, the business receives the remaining 20 per cent less any accrued fees.
Businesses that are eligible for debt factoring must have B2B sales on credit terms, and invoices for the sale of goods or services that have been fully delivered.
There are quite a few advantages to using debt factoring for businesses of all sizes.
- Additional cash flow for growing companies
- Bridge the gap of slow payments
- Working capital for startup companies
- Meet operating expenses
- Get on top of ATO obligations
It’s a flexible alternative to traditional business loans as it is adjusted based on the business’ sales. Debt factoring can hugely benefit cash flow since businesses can get instant access to a large proportion of the money owed to them instead of waiting for payments to arrive. As a result of this early payment, discounts can also be removed or reduced.
Businesses that use debt factoring has better negotiating powers with suppliers by using the money they receive to take advantage of early payment discounts and bulk-buying opportunities.
One of the main advantages of debt factoring is to provide working capital for growing companies. Access to instant cash allows a growing company to buy more equipment, meet ongoing expenses and hire more staff to service the increase in workload.
Our service allows you to immediately convert sales invoices into cash to help your business operate and grow.
Find out more about our debtor finance here.
Key Factors flexible debt factoring
- No lock-in or long-term contracts
- No minimum factoring volume
- No ongoing monthly charges or annual charges
- No quarterly audits
- No property security
- Fast 48 hours approval
With offices in Perth, Sydney, and Melbourne, our local state managers can provide a tailored cash flow solution to suit your business. Find out how Key Factors’ debt factoring, debtor finance and factoring finance and can benefit your business by contacting us today.