New data released by the Debtor and Invoice Finance Association (DIFA) this week reveals total debtor financing turnover in the June 2013 quarter was $15.4 billion, up 5.7 per cent from the March 2013 quarter.
According to Bibby Financial Services , one of the world’s leading global debtor finance specialists, Australian businesses are becoming confident about the economy given the greater political certainty, which is expected to add to demand for business credit including debtor finance.
The total debtor financing turnover in the June 2013 quarter was made up of invoice discounting turnover at $14.0 billion and factoring turnover at $1.4 billion. Total debtor finance turnover in the 12 months to June 2013 was $62.8 billion.
The rise in debtor finance came ahead of a survey from NAB this week, which revealed that business confidence jumped in August to its highest level since May 2011, spurred on by a cut in official interest rates to a record low, a lower Australian dollar and the impending Coalition government victory.
Separate data released by the Australian Bureau of Statistics this week shows the seasonally adjusted value of total commercial loans, mostly bank loans, fell 10.5 per cent in July 2013, after a rise of 10.9 per cent in June 2013. Over the year the value of total commercial loans rose 9.0 per cent. Revolving credit fell 27.2 per cent in July after a rise of 48.8 per cent in June, while fixed loans fell 3.2 per cent in July after a fall of 0.1 per cent in the previous month.
Gary Green, National Sales Director, Bibby Financial Services explains that small and medium-sized businesses (SMEs) are becoming more positive about the future now that the election has been decided. Continued growth in the number of businesses using debtor finance to boost cash flows and fund their operations is also expected.
Mr Green also refers to the findings from their recent Bibby Barometer survey of small business, which confirm greater optimism. Conducted in July 2013, the survey found 60 per cent of small businesses now expect sales to grow over the next 12 months, compared to just 51 per cent of businesses at the same time last year.
He observes businesses view the Coalition’s small business policies favourably including its promises to reduce the corporate tax rate and cut red tape.
The Bibby Barometer survey found that 65 per cent of small businesses would consider a non-bank lender if their business required credit. Debtor finance is an extremely flexible funding solution where businesses don’t need to provide real estate as security and credit is typically approved within 24 hours, much more quickly than bank loans.
Debtor finance allows SMEs to leverage their accounts’ receivables, often one of the largest assets on a business’s balance sheet, and to convert that asset into crucial cash flow. This type of funding can help management save time and focus on growing the business rather than chasing invoices.