Australian and New Zealand small businesses see growth in Invoice Finance

The Interface Financial Group (IFG), a growing source of alternative business funding for many Australian and New Zealand small businesses has recently announced that small businesses are still very much struggling to obtain finance from the banks.

It cited concerns amongst its target market that as per the UK finance market, the major banks are still not lending to small businesses, many of whom are indirect shareholders in the very banks refusing to offer support following taxpayer funded bailouts.

IFG, like Factoring Finance Ltd does in the UK, provides short-term financial resources including single invoice factoring to companies in Australia, New Zealand, Canada, and Singapore.

David Hechter, chief operating officer for IFG in Australia said the real issue for small business is funding accessibility. Commenting on reports that the Reserve Bank of Australia’s decision to raise the cash rate by 25 basis points to 4.75 per cent, effective 3 November 2010 had affected the appetite for business borrowing:

“The focus on interest rate movements has missed the point from a small business perspective that most small business cannot get a bank loan in the first place so interest rate levels are largely irrelevant.”

With traditional bank lending being too restrictive to the Australian SME market, just as UK business owners are experiencing here, he went on to say that:

“Small businesses are, however, seeing growth opportunities from Australia’s resilient economy which is why we believe that right now, invoice factoring or invoice discounting can be of benefit to many small businesses.”

About Invoice Finance
Invoice factoring is universal in its structure and rarely differs from country to country so the principle and the mechanics are fairly standard and unlike bank overdrafts and loans, secondary security such as personal guarantees, charges on property or other assets are not required as the security is the invoice itself.

Factoring is basically the purchase of your outstanding sales invoices (otherwise known as accounts receivables), by a factoring company who in turn advances you a percentage of the invoice (typically 80-90%). When your customer settles the invoice in 30, 60 or 90 days time, the factoring company repays itself the advance made to you (i.e. the 80-90%), takes its fees for the facility and pays you the remainder.

Growth in Invoice Finance over Bank Borrowing
Banks base their decisions on a customer’s (i.e. your) credit worthiness, conducts credit searches and looks at your bank statements, and both management and filed company accounts and in doing so, applies all manners of analytics to them to way up your risk profile.

With factoring, it is the value your invoices (accounts receivables) that matters. As such, with invoice finance a company can use one of its most valuable assets (namely its customer base) as a source of cash flow by selling these invoices to a factoring company.

About Factoring Finance Ltd
Factoring Finance Ltd has more than 30 years experience in finding the best invoice finance solutions for UK businesses.
We have an extensive, independent, UK wide broker network and access to sector specialists, helping find you the deal that’s best for your needs.

Factoring Finance can start unlocking the potential in your business, free up the cash in your outstanding invoices and leave you to put more time into your business.

Get in touch for more details and please review our ongoing survey into UK small business finance, ‘Banks, Bailouts & the demise of Business Link’ and let us know what you think!


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