Are your customers paying their invoices in 30, 60 or 90 days? This delay can create cash flow problems for medium-sized manufacturing companies that are growing quickly.
Most manufacturing companies have tight cash flows. Having to manage ongoing business expenses and fluctuating inventories often leaves manufacturers with low cash reserves. This predicament makes managing slow-paying clients very challenging.
You can solve this cash flow problem by using debtor financing. This solution finances slow-paying invoices and provides your manufacturing company with funds to pay expenses, buy inventory and take on new clients.
Which solution is right for you?
We offer two types of debtor financing: invoice factoring and invoice discounting. Both offer similar benefits but are designed to work with manufacturing companies of different sizes and financial capabilities.
Invoice factoring: Designed to help small and mid-sized manufacturing companies. Factoring finances each invoice individually. The solution provides funding services, credit management and invoice collections.
Invoice discounting: Designed to help larger manufacturing companies that have their own credit and collections departments. Invoice discounting finances invoices in batches rather than individually. The solution provides financing only.
How does debtor financing work?
Invoice factoring and invoice discounting allow you to finance slow-paying invoices from creditworthy commercial clients. The programmes accelerate revenues and provide working capital for your manufacturing business. However, they operate somewhat differently.
Invoice factoring transactions are often financed in two instalments. The first instalment is advanced as soon as you submit the invoice for financing. It covers about 80% – 85% of the total value of your invoices. The second instalment is deposited to your bank account once your clients pay their invoices. The second instalment covers the remaining 20%, less our fees.
Invoice discounting works like a revolving financing line as invoices are financed in batches rather than individually. On average, you can finance 80% – 85% of the total value of the invoices. The financed amount is adjusted regularly as your customers pay their invoices and as you raise new invoices.
Pay suppliers and buy inventory
Paying suppliers and buying inventory is always a concern for manufacturers, especially when cash is low. When used correctly, a debtor finance programme improves your cash flow and provides you with funds to pay suppliers and buy inventory. This feature is important, especially if your company has pending orders.
The programme also helps manufacturing companies that want to pay their suppliers early, allowing them to to leverage early payment discounts.
The most important component of a debtor financing programme is the advance percentage, as it determines the amount of money you get as a first instalment. Our programme provides companies with high advances – usually 80% of the invoices or higher.
Note that advances vary based on the size of your facility, the quality of your invoices and your needs.
We can provide competitive debtor finance terms to growing manufacturing companies. For information, fill out the enquiry form and a representative will contact you shortly.
Qualifying for our programmes is relatively easy. Most small and medium-sized manufacturing companies that have high-quality invoices should qualify, as long as the business does not have serious problems.
Debtor finance can be used by companies that need financing quickly. Most accounts can be set up to receive their initial funding in about ten working days. Subsequent invoice batches can be financed in about a day.
Please note that larger clients or complex accounts may take longer to set up.
Is debtor finance right for your company?
Invoice factoring and invoice discounting are designed to help manufacturing companies that have cash flow problems due to slow-paying clients. In general, these solutions can help you if your company meets these criteria:
- You give you clients 30 to 60 day net terms to pay invoices
- Your clients have good commercial credit
- Slow client payments are creating financial problems
Get more information
For an instant online quotation or to get a call from a representative, fill out the enquiry form.
To learn more about our solutions and how they work, read:
- What is Debtor Financing?
- What is Invoice Factoring?
- What is Invoice Discounting?
- Debtor Financing v. Overdrafts
- How is Invoice Factoring Different from Invoice Discounting?
We provide invoice factoring and invoice discounting services to companies throughout Australia, including: