Factoring, also known as Debtor Finance, has long been recognised as a useful cash flow tool for businesses that offer 30- to 60-day terms to customers but experience problems waiting for payments. Factoring works by funding slow-paying invoices, which then improves cash flow and provides funds to pay for operating expenses or finance growth.
The use of debtor financing has grown strongly, as it has become more widely recognised as a valuable financing tool, supplementing or replacing traditional overdrafts or fixed-limit business loans from banks.
The Debtor Finance industry in Australia had a total turnover of $63.7 billion in the 12 months to March 2014 and is continually being adopted as a finance product by Australian businesses. Read more.
Although Debtor Finance is a well-established product found in a wide range of industries, particularly manufacturing and wholesale trade, the stumbling block faced by Factoring Companies which provide this product is a lack of capital available within Australia to allow businesses to grow at a consistent rate. If these Factors were able to access a reliable source of capital, they could in turn fund more SME’s with the working capital they need to operate and grow.
Westlake Funding has identified a glaring gap in the market in servicing these Factors and Debtor Finance Companies by providing them with a stable source of reliable wholesale funding.
This in turn allows Debtor Finance Companies to provide working capital through debtor finance or factoring solutions to Australian SME’s. The provision rests on the basis that ALL receivables, that is all invoices and the underlying credit risk, are credit insured with a rated international credit insurer with the benefit of that insurance being assigned directly to Westlake.