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Is factoring, debtor finance, invoice discounting, invoice funding a good product?

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article image Debtor finance

All businesses wish they could all have their own money tree. It’s just not that simple.  

Debtor finance, factoring, invoice discounting have all been exploited in the past for all the wrong reasons. Robbing Cashflow to pay for behind payments or bad debt experiences has often given businesses and lenders a bad experience . For Example: what happens when the company gets into financial trouble and the costs of the lender add up, or the lender puts their funding on stop for whatever reason. 5/10 businesses in this position say the lender caused their business to fail.  

When it comes to responsibility of decisions: Who signed up for the facility, who knew the costs, and who had the previous debt or problem before factoring. The owner did.  Whether the owner was explained the product and its structures fully, the team at Trade Debtor Finance Consultants will never know. Regardless of that, the owner holds all the cards and often an incorrect decison becomes a fatile error in this finance product.  

If the Finance facility is operated and maintained properly and is correct for a business, it works.  

TDFC has experienced staff to help monitor the lender and product to avoid any mishaps. They also have a large network of professionals to assist a business with any scenario. TDFC stand by service and if we don’t know we will use those contacts and endeavour to find solutions for the business, to make the correct decision.  

Another big statement is: owners say that their cashflow is great, they don’t need to debtor finance.  

So if all accounts are running smooth and the business have the ability to get more staff/ salesmen or stock and chase more work. Then these are the ultimate reasons for Invoice Discounting. Funding invoices in advance of waitng to be paid, gives the business the opportunity to push its cashflow, getting much needed funding advanced to pay for more staff or product increasing the business size. The business can place factoring costs in new job quotations. If they have more stock or staff, they have the potential of more sales and growth. More growth means more profits and greater buying power.  

The main alternative to Invoice Discounting or Factoring is the banks. The business can go for that overdraft or line of credit, but as everything tightens up in the financial world, they turn to security of assetts. Most businesses just don’t want to, or have those options available.   Debtor Finance is often secured by the debtors. It can be disclosed or undisclosed. The business can have debtor insurance to help eliminate bad debt. It can be selective, it can be fixed fee, there are so many other versions available.  

TDFC explains all the benefits of factoring and Invoice Discounting. TDFC has over 11 lenders and numerous products for businesses to choose from.

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