As an integral part of our commercial loan portfolio, Jade Finance provides effective Debtor Invoice Funding to support businesses on either a long-term ongoing basis or to solve short-term cash flow issues. Sourcing a viable, affordable solution to the problem of delayed debtor payments can be a critical move to improve the sustainability and viability of many businesses. With some companies running a payments schedule well beyond 60, 90 or even more than 120 days, waiting for invoices to be finalised for work completed is a major problem for many businesses.
Apart from the cashflow implications which can delay or prevent investments the process can be a vicious circle which prevents you paying your suppliers which causes both you and your suppliers more problems.
Jade Finance works with businesses to reduce or eliminate the problem of debtor payment with solutions to better manage cash flow. A very specialised area of finance, the process involved with establishing Debtor Invoice Funding is based on the unique circumstances of individual businesses and may vary across the lenders that are active in this field.
Your Jade Finance consultant will work closely with you throughout, explaining each step, providing complete details and sourcing you an offer that works for you.
Guide to Debtor Invoice Funding
The process varies but as a general guide:-
- Your Jade consultant will establish a debtor invoicing funding facility with a lender.
- This facility is similar to establishing a loan facility and involves negotiating the best interest rate, terms and conditions.
- Once in place, the process operates quite seamlessly.
- Your business completes work as ordered by a client or customer, known as the debtor.
- You produce an invoice for that work and issue it to the debtor and send a copy to the lender that we have arranged for your debtor finance.
- On receiving the invoice copy, the lender virtually immediately pays you that percentage of the invoice that has been agreed upon in the funding contract. This initial payment varies and may be as high as 95% of the invoice, 80% or another value. This is negotiated with you and your Jade consultant.
- According to their payments schedule, your customer (the debtor) pays the invoiced amount in full into a bank account which has been established in your business name, but is actually operated by your lender.
- Once your lender has received payment from your debtor, the lender then remits the final outstanding payment to you. Eg, if the initial payment is set at 80% then the final payment will be 20% of the invoice value. Less their fees and the interest charged at the rate negotiated by your Jade consultant.
- Fees are a small set percentage of the invoice.
Debtor Invoice Funding provides your business with immediate funds by way of the initial payment from the lender when you raise the invoice. You only have to wait for a small percentage to be paid at the later time. You can better plan your business activities, confident that your cashflow is assured, without the necessity for additional financial assistance by way of say an overdraft.
For many businesses, the cost of Debtor Finance is less than the alternatives sources of finance and has the additional advantage of not requiring ‘bricks and mortar’ security and personal guarantees.
This also provides a useful resource to identify problem areas within your business and possibly problem clients that require attention. It also frees up your accounts staff from the tedious task of chasing up unpaid invoices.
As a finance professional, your Jade Finance consultant is across all the details of Debtor Invoice Funding and can discuss the implementation of such a system with you.
Speak with a Jade Finance Consultant to discuss your unsecured business loan requirements. Call 1300 000 003