Advantages of Debtor Finance
When your business is struggling with cash flow, you can use debtor finance to convert your sales invoices into cash. You will have your invoice’s face value credited into your account within hours instead of waiting for months for your clients to pay up. There are a lot of advantages your business can enjoy because of debtor finance. Another benefit associated with debtor finance is that it helps you pay for all the necessary expenses. The fact that you will have enough cash will make this possible. You can then use the money to pay for expenses like wages, taxes and supplier payments. You will guarantee the efficient operating of your business when you have liquidity.
Another advantage associated with debtor finance is that it is flexible and it grows with your business. Your account receivable is directly linked to the financing line. This is what makes it easy to adjust accordingly. When the sales to your clients increase, the line increases automatically. The funds from debtor finance are obtained quickly when you need them. An added advantage of debtor finance is that no real estate security is required. The assets of the company are the ones that secure the financing line. Real estate security is not needed by the business owner in this case.
Another merit associated with debtor finance is that it helps companies that are dealing with cash flow problems. A company may have a cash flow problem because of slow-paying invoices. Once you finance the invoices, the improvements are highly significant, and they can be easily noticed. These improvements make it easy for a company to gain control over cash flow. He is also able to manage payments and new investments in a better manner.
The fact that you will be able to extend terms with confidence is another benefit associated with debtor finance. When you don’t have enough cash at hand as a business, it may be hard for you to extend terms to clients. You can extend these payment terms to clients by using debtor finance if you don’t have time to wait. In this case, you will not have to worry about slow payments. You will just need to finance the invoices and get the funds instantly. This give you a chance to take advantage of new sales opportunities and grow your business. Debtor finance is also essential because it can be deployed quickly. With this quick deployment, it becomes easy for your business to solve your cash flow problems quickly. Within ten business days, you will have the money in your account. It will be very crucial to ensure that you choose a company with expertise and experience in debtor finance.