Following the withdrawal of the debtor finance service by the Commonwealth Bank, Bibby Financial Services - Flexible Cash Flow Solutions has reaffirmed the importance of debtor finance and its support to the Australian market.
Bibby Financial Services is a world-leading specialist provider of non-bank debtor finance to businesses.
According to Bibby, small to medium size businesses (SMEs) should not misinterpret the bank’s decision to exit as a question mark over the demand and growth of the product and industry, which grew 6.6% over the year to March 2011.
SMEs are in greater need of flexible forms of working capital more than ever before, says Greg Charlwood, Managing Director, Bibby Financial Services who does not believe that the bank’s business decision will adversely affect the market in Australia.
He explains that SME interest in debtor finance grew rapidly during and after the global financial crisis, when credit became scarce and borrowers did not want to use personal property as security. Debtor finance is now used widely throughout the business-to-business sector and SME confidence in this form of funding is growing.
Given that SMEs are dealing with rising interest rates, a sharp increase in the Australian dollar in recent months and continued pressure from the Australian Taxation Office (ATO), businesses now more than ever need reliable sources of working capital to overcome cash flow volatility.
Wholesale trade, manufacturing, property and business services, labour hire, transport and storage, and agriculture and mining services are some of the main sectors of the economy benefiting from cash flow funding.
Rated as one of the top three products to watch in 2011, debtor finance typically converts up to 85% of the value of each sales invoice into immediate cash within 24 hours. Once payment has been received from the debtor, the remaining 15% less a service fee is returned to the client.
Bibby Financial Services is a global specialist provider of debtor finance services and is committed to the Australian market. With over 25 years of experience across 14 countries, the company serves 5,400 debtor finance clients, with debts factored of $9 billion in 2010. In Australia, the company has grown 20% year-on-year over the last two years off the back of strong demand for cash flow products.
Also known as invoice financing, factoring or discounting, debtor finance had a total turnover of $59.5 billion over 12 months ending March 2011, a growth achieved despite ANZ Bank’s exit from the debtor finance market last year. Mr Charlwood is confident that the sector will remain buoyant this year following Commonwealth Bank’s decision.