According to Bibby Financial Services - Flexible Cash Flow Solutions , Australian businesses are increasingly using factoring finance, reflecting the growing popularity of debtor finance in the Australian marketplace.
Bibby Financial Services is a world-leading global debtor finance specialist.
New data recently released by the Debtor and Invoice Finance Association (DIFA) reveals that total debtor financing turnover in the March 2013 quarter was $14.6 billion, including invoice discounting turnover of $13.3 billion, and factoring turnover of $1.3 billion.
Total debtor finance turnover over the year to March 2013 was $63.1 billion, up 2.1% from March 2012, highlighting solid growth compared to overall business credit growth. Over the year to March 2013, business credit showed sluggish movement of 1.6% growth and rose by only 0.2% over April after decreasing by 0.1% over March.
DIFA statistics show an increase in factoring client numbers to 1646 in the March 2013 quarter, the highest since March 2008, and up from 1596 in the December 2012 quarter.
According to Gary Green, National Sales Director, Bibby Financial Services, small and medium-sized businesses (SME) are facing a challenging cash flow environment, making them explore innovative ways to manage their cash flows such as debtor finance since they are not getting funding support from the banks, previously relied upon by this business segment.
Bibby Financial Services expects more SMEs to use debtor finance as they head into a busier season with wholesalers and manufacturers looking to fund orders and production. Additionally, the falling official interest rates will help to stimulate business confidence and investment, which will add to even greater demand for debtor finance to fund growth.
Mr Green adds that debtor finance is ideal for SMEs because it allows them to quickly convert unpaid invoices into cash. Businesses can leverage their accounts’ receivables, typically one of the largest assets on a business’ balance sheet.