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SP 30yr AUS

Update: The Australian and New Zealand operations of Bibby Financial Services were acquired by Scottish Pacific Business Finance in late 2015 to create Australia’s largest non-bank invoice finance specialist. Welcome to our website.

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Cash Injections for Growing Pains

Cash Injections for Growing Pains

Cash is King.

There are many reasons why businesses succeed, but a major contributor which is often overlooked in the chase for more sales is maintaining a strong cash flow. Every successful business has its own unique features, but effective cash flow management is a common thread.

Many profitable businesses experience peaks and troughs in their cash flow and need an injection of working capital to carry them through.

Rapid sales growth is typically viewed as a positive by business owners, however, it brings with it the challenge of avoiding ’the death valley curve’ associated with overtrading. This occurs when the timing gap between payments due out and payments due in is too great; the result being a fatal cash shortfall.

As businesses experience rapid growth they are constantly looking to add more staff, services or stock to keep up with demand and this investment requires additional funding.

So what are the options?

  • Operators can look for new equity from an outside investor. This involves sharing ownership but could also improve the level of expertise within the business.
  • Negotiating extended terms with trade creditors, which may come with increased prices or the withdrawal of discounts.
  • An increase in the bank overdraft facility might be available if there is sufficient real estate security available.
  • A debtor finance facility.

Why Debtor Finance?

Debtor Finance facilities are flexible and grow in line with turnover, so there is no requirement to continually renegotiate the limit.

There is typically no requirement for real estate security, so the family home can be made available to support personal borrowing requirements.

Unlike a typical bank overdraft it is not common for business performance covenants to be attached to the facility approval.

Most debtor financiers offer a full collections service in addition to the funding line, freeing up valuable management time to focus on growing the business.

Debtor Finance - The Best Option?
Once a debtor finance sceptic; now a convert.
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