Click on each question to see the answer.
How Should I Finance My Business?
- Equity or Capital
- Hybrids of Debt & Equity
It is important to use the right mix of financing. The right mix depends on a wide range of factors such as the maturity of your business, the type of business, the industry that your business operates in, your appetite for risk, and so on. Read more.
There Are So Many Business Finance Products. How Do I Know What’s Right For My Business?
- Purpose: What the money can be used for
- Loan Term: How long you can have the money for
- Repayment: When do you need to repay the money
- Security: Do you have to provide any assets or guarantees during the term of the loan?
- Other: Are there other things that you must do during the term of the loan?
The fundamental principle is to ensure that the debt finance package matches what your business needs and can afford. This is known as “match funding”. Read more.
What Is Cash Flow Based Financing?
The term of the loan and repayment schedules are ‘matched’ to your forecast cash flows. Read more.
What Is Debtor Finance?
Once the facility is established, most lenders will advance the funds within 24 hours of the invoices being presented to the lender. The balance of the value of the financed invoices are returned to you when the invoices are paid by your customers.
What Are The Benefits Of Debtor Finance For My Business?
- Assists cash flow of the business by freeing up cash tied up in trade debtors.
- Highly flexible solution and ideal for rapidly growing or highly seasonal businesses. The debtors ledger is the key security and size of the facility can increase in line with growth in sales and debtors.
- Real estate security is not usually required.
- Cash that is freed up can be used to take advantage of discounts from suppliers.
- Can be a more cost effective way of accessing cash flow than accepting early settlement discount terms, particularly when dealing with major corporate customers.
What Is The Difference Between Invoice Discounting And Factoring?
- Administration Of Debtors Ledger And Collection Of Accounts.
- With Factoring, the Factor (lender) takes on this function.
- With Invoice Discounting, your business remains responsible for this function.
- Disclosure To Customers.
- Factoring is a Disclosed solution. Your customers are notified that payments are to be made to the Factor (the financier).
- Invoice Discounting is a Confidential product. Your customers do not know that you are using Debtor Finance.
What Type Of Debtors Can Be Used For Debtor Finance?
- Only commercial debtors can be financed.
- It must be a legally enforceable debt. If payment of the invoice is subject to performance or certain other conditions, it will not qualify for debtor financing. Example: Progress claims, common in the construction industry, do not qualify.
- Concentrations: Financiers differ in their policies on this.
- Quality of Debtors Ledger which takes into account Ageing, MIS/Credit Controls, Disputes/Returns history.
What Is Equipment Finance?
In Australia, there are a number of different forms of equipment finance such as Hire Purchase, Leasing, Chattel Mortgage. The ownership, tax and accounting implications are different. You should always get advice from your accountant as to what is right for your business.
What Are The Benefits Of Equipment Finance?
- conservation of working capital
- ability to keep at the forefront of technological advances and improve efficiencies
- tax benefits (provided that the equipment is used for business purposes)
- flexibility in structuring payments to suit your cash flow
- budgetary certainties as most equipment finance agreements are written at fixed rates for fixed periods.
Both new and used equipment can be financed. Read more.
What Is A Finance Lease?
What Is A Chattel Mortage?
What Is Commercial Hire Purchase?
Can You Help Me With Finding Investors For My Business?
Find out more about the benefits of using ASSOB for fast growing businesses.
What Type Of Finance Services Do You Provide?
My services are provided as a fee-based consultancy (not as a commission-based broker). What is in YOUR best interests is core to what I do for you.
Please visit my Consulting page to find out more about typical projects, how I work with clients, and my fee structure.