Guide To Debtor Finance

What is Trade debtor finance, Full Service Factoring, or Invoice Discounting?
Trade Debtor finance, Invoice Discounting, or Full Service Factoring is where a business sells all or part of their debtors’ ledger (Unpaid Invoices) to a financier to raise working capital (Cash) for expenses, wages or fuel.

How does debtor finance / factoring work?
As a business delivers its goods/services to its customers, the invoices (trade debts) raised can be sold
to a financier.

The Financier would advance up to 80% of the un paid invoices value within 24- 48 hours. The remaining 20% is advanced after the invoice is paid less a small fee of about 1-3% to the financier.

The business simply forwards copies of the invoices to the financier. Once verification of invoices is complete funds are advanced.

The business can retain control over accounting functions and collections or they can opt to for the financier to control this function.

What are the benefits of debtor finance / factoring to a small business?
Trade Debtor Finance offers the business flexibility, as the following benefits illustrate:

Funds are readily available: credit sales are converted into cash normally within 48 hours.

With cash in the bank, the client can negotiate better trading terms with suppliers, including early settlement
discounts and the ability to buy in bulk.

Eliminate the need to offer settlement discounts to customers. Invoice Discounting fees are usually
cheaper than settlement discounts. With Invoice Finance, the client knows with certainty when they
will receive the cash.

What are the costs?
Different lenders charge different fees based upon setup structure, size and risk.

The average cost of debtor finance is 3%, however this will vary depending on your debtors payment terms.
The longer it takes for them to pay the higher the cost.

Why Choose the Trade Debtor Finance Consultant?

Confidential: TDFC will not sell your information to a third party.
Choice: TDFC has access to over 11 trustworthy debtor finance lenders.
Experienced: TDFC are experienced in debtor finance and know what lenders to recommend for your business needs
Trust: TDFC will give you no nonsense answers and will explain all costs
Successful: TDFC can give you recent successful client referrals.