Why use this type of finance?
Mon, 04 Jun 2007
Debtor based finance has a number of advantages over traditional overdraft funding arrangements:
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Debtor based finance |
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Flexibility |
Funding automatically expands directly with your debtor book to match the level of your trading |
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Level of borrowing possible |
Can provide a facility of typically 75% to 85% advance against current debtors |
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Ability to borrow against finished goods stock |
Some invoice discounting facilities will allow an additional level of advance against finished goods stock |
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Credit control services |
Yes with factoring |
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Bad debt protection |
Can be built in using ‘non-recourse’ arrangements |
Many of these factors make debtor based funding highly suitable for high growth companies where the access to flexible funding that can grow with the business helps eliminate the risk of overtrading.
Combining this type of debtor based funding with other ‘non-bank’ sources of finance such as specialist commercial mortgages and plant and machinery based funding can allow you to raise significantly more than may be available through traditional high street banking arrangements.
Try using our How Much Can You Borrow calculator to see what funding you may be able to raise from different sources.
