If you are in a business where customers are routinely invoiced, you understand well the frustration of knowing how much money you have earned, but do not quite have access to yet. In a growth-oriented economy, the business that can keep this money coming and going out in the form of infrastructure investment is likely the business that is going to gain the competitive advantage. It is critical, then, to focus on that accounts receivable portion of your portfolio and put that money to good use. Now, there is an option available to creditworthy organisations that enable them to do just that.
Benefits of Debtor Finance
Many individuals try to avoid financing items as much as they can, and this is a great strategy to employ. Businesses try to adhere to the same principle, which can be frustrating when you need quick access to cash that you know is yours, but simply has not come in just yet. With factoring, things will go easier for your operations. You and your business can avoid having to approach a bank for your lending needs, as debtor finance has been made available to you. It is a mechanism by which a non-bank finance firm will front you a considerable portion of your accounts receivable for you to use right away. Then, when all of the money owed you by customers up to that point does arrive, they will give you the remaining portion, minus a small fee. It is a great service that many companies around the globe have used to satisfy their quick need for working capital.
With the debtor finance process just described, companies can quickly improve their cash flow, receiving money from their accounts receivable within only 24 hours. This enables them to save time and money, while proving to be an efficient way of keeping up with the servicing requirements on the accounts receivable accounts as well. Unlike traditional collateral-based loans, there is no requirement to put up any real estate as security. As your sales increase, so will the funding limits that are provided to you. This means that you will have constant access to money right when you need it in order to take advantage of time-sensitive opportunities that might present themselves to you.
Protect Your Business
You want to protect your business from customers that do not have the means to pay you. Obviously, you will not last very long in the industry if you have multiple customers that simply do not pay for the products or services that you have already delivered. Using a debtor financing option can also serve as a way to minimise your exposure to bad debt by having an outside party work to reduce your risk exposure. They are the experts in that field, so they will give valuable advice and insight that will help to keep your business running strong. Reducing your risk in this way will also increase your own reputation, and afford you additional access to funds when you require them in the future.