Australian companies increased debtor finance levels to record highs by selling $54.3bn to factoring and discounting facilities in the year to December 2007, with the December quarter turnover up 20% on the previous year’s corresponding period, according to new data from the Institute for Factors and Discounters.
In the December quarter turnover in the debtor finance industry grew to $15.7bn – up $2.6bn on the same quarter last year, with invoice discounting still representing the majority of debtor funding in Australia at $14.8bn and factoring turnover at $891 million.
The State turnover was still heavily skewed to the Eastern States, with Victoria accounting for 34%, NSW and ACT 33%, Queensland 17%, SA and NT 7%, WA 8% and Tasmania 1%.
New debtor finance clients grew by 13% in the last twelve months to 5,921. Commenting on the findings Rob Lamers, CEO of debtor finance firm, Oxford Funding Innovative Solutions (a division of Bendigo Bank) said the figures are proof that the Australian debtor finance industry is going from strength to strength despite the tougher financial environment.
“Debtor finance is becoming one of the primary working capital finance tools for business,” said Rob Lamers. “In an environment where business overdraft rates are now outpacing official Reserve Bank cash movements with many banks charging more than 10% a year, and with the cooling of the property market, we will see a strong movement away from property secured lending to use business assets.”
Rob Lamers predicts the total turnover for the debtor finance industry could surpass $60 billion by September 2008. The strong growth of debtor finance in Australia was in line with International trends. World figures showed that debtor finance increased globally in 2006 by more than 12%.