Trade Debtor Finance – Debtor Finance Explained Part 1 of 3

Debtor Finance is a bank facility to help specific businesses with cash flow. Click On This Link To Find Out More…

0:31Welcome, my name is Jason Goodwin and I’m from Trade Debtor Finance Consultants
0:36I have over 14 years experience in the industry
0:39and over the next 20 to 30 minutes
0:43I’ll be explaining all the ins and outs of factoring
0:46debtor finance and invoice discounting, you can email questions throughout
0:52the webinar at any time
0:56so let’s get into it. Why do you use factoring?
1:00Most young businesses need capital to grow
1:03there is only 2 types of ascertaining this capital
1:08you personally putting the money in or you borrow it
1:14lines of credits, short term lending business loans
1:18all require some sort of personal security
1:22you need great profitsheets
1:25in equity in your business and strong balance sheets
1:32young businesses would take these options because they are
1:35cheaper and that’s good but unfortunately
1:39they don’t grow with you so once your grow your business to that particular level
1:43unless the bank sees that and
1:47is comfortable with the risk that it has
1:50normally they stay stagnant and you just keep continuing to run your business
1:55with those fixed overdrafts or lines of credit
1:59until such time as you require more assets
2:02Debtor Finance
2:05debtor finance only requires
2:09strong debtors, if there’s a spread
2:13then the risk to the lender is down, in most cases
2:17all they need to do a debtor finance still is a personal guarantee
2:21now unless you ask for stringent things to happen like confidentiality
2:26or,you know, 1 on 1 debting, you only wanna factor so much you don’t want a
2:30lock-in contract
2:32then property is normally not an option. Debtor finance has the flexibility to grow
2:39with your business as you grow ’cause let’s face it the more debtors that you
2:44the more stock you get out there the more invoices you provide the more money
2:48the lender makes, the more money you make
2:50I see question there
2:55just briefly it just flew through on the email
2:58why are so many people scared of debtor finance or factoring?
3:04it was because of our 20 years ago when it first came into the country from the
3:08there were certain companies that used it
3:12as a method of last resort, now
3:15the bank’s are traditionally favorites for
3:18overdrafts, lines of credits, you know, business loans
3:23surely because they really want to
3:26ascertain a business they want the trading account they want the
3:29the directors, they want the directors trading account, they want everything in
3:33one little nicely little bag
3:35well back 20 yeras ago it wasn’t exactly like that so
3:38when you can couldn’t get traditional lending ’cause it was too tough
3:43these little factoring firms popped their heads up charging a
3:47a ridiculous amount of interest rate, you know
3:50one off fees and then interest rates that were over 36% per annum
3:54and in some cases 72% per annun and they were sending business
3:59right, left and centre. Now unfortunately in today’s market there is still some
4:05lenders out there that
4:06traditionally charge quite hefty for their fees but that’s what this
4:11webminar is all about today
4:13it’s about growing your business not sending your business broke and it’s not a
4:16method of last resort if
4:18any business is failing and they need
4:22to rob Peter to pay Paul well they need to rethink their whole strategy
4:26and avoid this product at any cost. Okay the factoring and debtor finance products
4:35themselves; most people would be waiting for this
4:37sort of run down. There are
4:41over 45 lenders in the country and they range
4:46from various products but
4:49I and the business that being able to break them down
4:53into the these sort of categories:
4:56single invoice factoring, full-service factory
5:00partnership factory, confidential
5:04factory, invoice discounting. Now
5:10we’ll start from the top because basically
5:13lenders use these terms: factoring, debtor finance, invoice discounting but
5:18they all mean the same thing
5:19it’s just putting invoicing in and getting advances on ’em
5:23now with invoice discounting this was created
5:26by the banks ’cause of the stigma around factoring


Phone: 1300 00 8332
Fax: 07 5547 8731
PO Box 300,
Waterford West
QLD 4133

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