Businesses, especially small and medium sized ones, have to be smart and organized when it comes to money management. There will be times when owners will need to access more money than the business has available. Knowing what options to use at what times can make the difference between a business thriving and a business closing. Bank loans can be helpful when large amounts are needed for specific projects, such as acquisition of a new building, major renovations to a current location, equipment replacement, or expanding the scope of the business. The process may take a long time to move from application to approval, and the interest rate and payments have to be carefully considered, but it is a viable option under certain circumstances.

When cash flow is needed, there are other debtor finance solutions that make more sense than a loan from a bank or a private lender. Asset financing allows a business to acquire new or used equipment through the use of a financing company. It works much like a lease agreement until the amount is paid off. The business can write off the payments as operational expenses, so there is a definite tax advantage to this type of debtor finance. Another option is factoring, or invoice financing, that is used by businesses who sell goods and services to other businesses. Wholesalers, manufacturers, construction companies, engineering firms, import companies, and many other industries utilize invoice finance perth when cash flow is needed quickly. A business may need to cover expenses, meet payroll, or order supplies.


Invoices are sold to a third party at a discounted rate for cash. The most common discount rate is eighty percent, but it can range from seventy to ninety percent, depending on the company. The company makes a profit when it collects the full amount of the invoice. There are several business advantages to this solution. It is not a loan, so it does not appear as a debt on business records. There are no out-of-pocket expenses for the business, no interest rates, and no monthly payments.

There is a lot of flexibility because most finance companies allow businesses to sell only some of their invoices and keep the rest, from which they can collect the full amount. It can be a one-time arrangement or an on-going set-up from month to month. There are many cashflow debtor finance available to businesses, so owners need to look at each option and determine which one will suit the current business needs.