BCashflow Positive / Blog

Don’t use the equity in your home to keep your business open – Use debtor financing

Mar 18 2018

Small businesses are being forced to take loans using the equity in their home in order to keep their business afloat. Loans taken out against property are used to pay wages, sustain cash flow and keep businesses operating.  But this can put a huge strain on the business owners and put them at serious risk of losing everything. When you take a loan out against your house then you risk losing your home if your business fails.

Equity drawings from residential properties for business purposes have increased by over 50% over the past 6 years.  This is putting properties in the firing line and business owners at risk of losing it all. Instead of using equity loans there is another option, debtor financing. Debtor financing can be used to improve your business cash flow without needing to draw equity from your home.

What is debtor financing?

Debtor financing uses the amount of money owed to a company as collateral.  It allows you to turn your accounts receivable into cash.  Effectively this form of finance allows you to access funds that are not yet available to you because they have not yet been paid. This is great for maintaining a constant cash flow as you can access this cash sooner, allowing you to repay it when your client pays.

Typically, you can get up to 90% of the invoice value within 24 hours, allowing you to overcome your cash flow problems quickly and easily.

How does debtor financing work? 

Debtor financing is a means of funding small and growing businesses that need working capital so that they can operate. It allows you to finance against slow paying invoices and help you to overcome cash flow problems by following 3 simple steps:

1) Invoice your clients for sales of goods or services and send BCashflow Positive a copy.

2) BCashflow Positive will verify with your client that the goods have been delivered, or services have been fully rendered, before releasing up to 90% of the invoice value.

3) The remaining 10% is provided to you once your client pays us, less any accrued fees.

How do I qualify for debtor financing?

Debtor financing is suitable for small to medium businesses with a high level of customers on accounts and has a monthly turnover of $100,000 to $3,000,000.

How much does debtor financing cost?

At BCashflow Positive we are transparent about fees so that you will know how much it is going to cost from the outset. Debtor financing costs will vary depending on the invoice amount and how long it will take for your client to pay the invoice. For example, on an invoice of  $100,000 which is paid 30 days after it was funded will incur a fee of 1.8%. Give our fee and funding calculator a go to work out how much funding you can get and how much it is going to cost.

What are the benefits of debtor financing?

Debtor financing allows you to solve your cash flow problems by releasing immediate cash from your receivables. These problems could otherwise lead to your business being unable to operate and this can ultimately cost you your business. Debtor financing does not require real estate collateral either, which means that you do not need to use the equity in your home to pay for your business operating costs.

Apply Now

Apply for debtor financing with BCashflow Positive is quick and simple. Our online application takes 3 minutes to complete and a response is provided within 24 to 48 hours. Unlike traditional business loans, or loans to draw equity from your home, which can take weeks to months to get a response.

What Our Clients Say

"We used BCashflow Positive when our bankers didn't want to know us, as we operate in an industry that was going to be affected by the introduction of the carbon tax.Traditional lenders were unable to deal with the uncertainty and risks.
BCashflow Positive understood the risk and assisted us with our cash flow, which was great"

Financial Controller, Solar Manufacturing Company, WA

"Getting instant funds from our invoices is crucial to our business success. It means we can pay wages on time and grow our business. The staff are also great to deal with."

Owner, Recruitment, NSW

"We engaged BCashflow Positive to get on top of our ATO obligations. Constant cash flow allows us to meet our operating expenses and grow our business."

Accountant, Earthmoving, QLD

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