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How to Choose the Right Debtor Finance Provider


Debtor finance is becoming an increasingly popular financing solution for small to medium enterprises (SMEs) across Australia. There are many reasons for this, including heightening global acceptance, the impact of Covid-19 and the lax Aussie payment culture that has only been exacerbated over the last twelve months. The main reason SMEs turn to debtor finance is to maximise their cash flow, either to maximise liquidity during slower periods or to facilitate additional working capital to fund expansion. Debtor finance allows businesses to turn their outstanding invoices into near-immediate cash, making it an incredibly practical solution to leverage an existing asset.

Given its surge in popularity, you’ve probably come across at least one of the many debtor finance providers that have popped up in recent years. It’s an increasingly saturated market, and the internet makes it easier than ever for prospective lenders to get your attention. As in any industry, not all services are created equal. You need to be vigilant and conduct sufficient due diligence to ensure the proper selection for your unique financial circumstances. Debtor finance is a partnership with your business rather than a one-off loan application, so it’s even more essential than with other financing products. Here are our top tips on what to look out for, as well as the benefits of enlisting the help of a specialist broker to help you out.

What to look for in a debtor finance provider

Before you start doing in-depth research into any particular lender, it pays to know what you should be keeping an eye out for – avoid the red flags! The criteria for a great debtor financier are similar to other types of lenders, although there are a few particular nuances it pays to be aware of:

  • Reputation: Finance is a serious service; you don’t want to deal with a dodgy operator. Check out their history. Are they a new provider, or have they been around the block a few times? 
  • Efficient processes: Banks aren’t known for their speedy protocols, and the same tardiness won’t fly here. Quickness is one of the essential components of an invoice finance facility – you need the money A.S.A.P.
  • Transparent contracts: Debtor finance can be complicated; there’s no denying it. You want a provider that is transparent and helps you understand what you’re getting into.
  • Customer service: You need to be able to reach your provider at any time. Make sure the company has the support teams in place to facilitate accessible communication.
  • Mutual understanding: Just as you need to understand the terms and conditions of the facility, they need to take the time to understand the ins-and-outs of your business too.

How to select the right one for your business

Do your fair share of research

While the general rules discussed above always apply, dive deeper to assess a lender’s suitability for your specific circumstances. Each debtor financier will likely have an area of expertise, such as servicing a certain geographic area or particular sectors. Have a look at the range of services and the types of facilities they offer. Perhaps they specialise in specific sized clients – you probably don’t want to be the smallest (or even the largest) customer on their books!

References. Testimonials. Reviews.

You should never limit your research to what companies only have to say about themselves. Ask around and search for external references and testimonials you can trust. You could ask the debtor financier to provide you with references from a company in the same industry as yours, as they probably share many of the same challenges as you do. Make sure to investigate verified review platforms, like Trustpilot, to get a taste of unfiltered customer feedback, as well as any evidence of how the company deals with that feedback – both positive and negative.

Request detailed contract terms

To make the right decision, you need to know all the details. Ask any prospective debtor financier for a detailed breakdown of how their facility agreements work, including every fee, charge and penalty that could possibly be applied.

Use a debtor finance broker instead

If all of this sounds like a whole lot of work, you’re not alone. Many small to medium businesses smartly choose to outsource the job of investigating the right debtor finance provider to a professional. Debtor finance brokers save you a whole lot of hard work – they know the in’s and out’s of the industry.

“Debtor finance brokers help ensure you get the best deal at no extra cost.”

The best debtor finance brokers will look to build a lasting relationship with you and your business, being there for you whenever you need them. They’ll listen to your situation and apply their industry expertise to their wide panel of debtor finance providers, ensuring you get the best deal at no extra cost.

Capital Plus Finance is an experienced debtor finance broker that has your business’s best interests at heart. With a panel of over twenty debtor finance lenders, The Capital Plus Finance team will do everything we can to help you secure a suitable finance solution. Please give us a call anytime to find out more or to have an obligation-free chat about your funding situation.