Debtor financing from Bibby Financial Services - Flexible Cash Flow Solutions has helped Topgold Enterprises manage its cash flow in the current tough economic climate for SMEs, according to Managing Director, Darrel Herbert.
Topgold Enterprises has used debtor financing, an efficient way to access cash readily since their inception in 2000 to assist with business growth and as an alternative to a bank loan.
Topgold Enterprises was introduced to Bibby Financial Services this year through a finance broker who is a strong advocate of the benefits of debtor finance.
“Our company’s principle is to offer employees that our clients don’t have themselves and provide ongoing support, so both the employer and employee have a successful working relationship,” Mr Herbert said.
Mr Herbert met with Gary Green from Bibby Financial Services and went through Topgold’s entire business model, goals and future plans. Gary recognised the strength of Topgold’s customer base and was able to lend on that basis, rather than relying on real estate as security, which was required by some banks.
According to Mr Herbert, Bibby releases funding on a daily basis, allowing Topgold Enterprises to manage cash flow easily and quickly. Leveraging receivables improved their cash flow, allowing Topgold to take advantage of unexpected opportunities and pay their hire staff on time.
The company sends copies of its invoices to Bibby Financial Services, which typically converts around 80 per cent of the unpaid invoices into cash within 24 hours. Funds are then made available to meet payment commitments to payroll and suppliers.
The remainder, less a small service fee, is transferred by Bibby Financial Services to the company once the invoice has been paid. Bibby provides a comprehensive accounts receivable management service as part of the facility, freeing valuable management time and resources.
Mr Herbert considers it a good business decision to have adapted debtor finance into Topgold’s business model, given the small business environment wherein SMEs are struggling to get business financing from the big banks with some of them going bankrupt as a result.
Topgold’s reliance on debtor finance has seen it grow significantly over the last 10 years. Mr Herbert prefers debtor financing over bank loans as the former is an affordable, flexible alternative source of cash flow.
The debtor finance segment registered the strongest growth in Western Australia in 2009 followed by Victoria.
Across Australia, Bibby Financial Services is also experiencing an increasing number of larger businesses using its debtor finance facility than before, which appears to be due to traditional funding sources re-setting their cut-off point for the size of companies they prefer to deal with for business loans.