Debtor Finance FAQs

Wondering what debtor finance is or if it can work for your business? Continue reading to find answers to the most frequently asked questions about Debtor Finance.

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1. What is Debtor Finance?

Most businesses have tens if not hundreds of thousands of dollars tied up in unpaid invoices at any one time. Debtor Finance unlocks that money by receiving the cash from those invoices as soon as they are issued. So much money is tied up in invoices nowadays, that a trading business can often meet major finance requirements in this cost effective way.

2. What size does the invoice need to be?

If you only have one customer (debtor) then invoices we fund need to be at least $50,000 or greater with no upper limit.

If you have three or more customers (debtors) then individual invoices can be as low as $2,500 each so that when “batched” together, the total value of invoices to funded at any point in time make up at least $50,000 of requested funding each time.

3. Will my customers think my business is in trouble?

Many business owners recognise that working capital is crucial for every business and that debtor finance simply allows businesses to grab opportunities which might not otherwise be available when working capital is tight.

Debtor finance has become so well established that it would not be uncommon if your customers already deal with other clients using OptiPay or other Debtor Finance providers. They may even use it themselves.

4. Who uses Debtor Finance in Australia?

The main areas of industry that utilise debtor finance are:

  • Manufacturing
  • Wholesale Trade
  • Engineering
  • Transport
  • Labour Hire
  • Mining Services
  • Professional Business Services

Debtor financing can also prove beneficial for:

Business start-ups – providing flexible finance to get new ventures off the ground.

Growing businesses – making your cash work harder for you.

Struggling businesses – bridging the gap between invoicing and receiving payment.

5. Does it matter if I only have one main customer?

Many growing Australian businesses have just one or two customers, which is not a problem when funding with OptiPay as we do not enforce debtor exposure limits on our clients. . We’ll provide funds to you as long as your customers have a good record of payment and are financially sound.

6. Should my business use Debtor Finance or Factoring?

There are clear differences between factoring and debtor/invoice financing.

Factoring is for companies that don’t have an in-house credit control function. It involves outsourcing all of your credit control (ie: Collections) processes to the factoring provider, allowing them to chase all outstanding payments.
Some business owners may be reluctant to go down this route, as it means relinquishing control on a key part of your company’s day-to-day operations and they may not need or want to fund every invoice to every debtor.

Debtor/Invoice Finance is a better option for many Australian SMEs because it allows you to manage your business is you wish. You are responsible for collections (and hence your relationships with your clients) and Debtors/Invoice Finance is cheaper than Factoring, as there are usually less service fees, no minimums and no long lock-in contracts.

MORE: Case study: Debtor finance for trade contractors

MORE: Debtor finance makes sense for commercial cleaning companies

MORE: Debtor finance for the labour hire industry

Free Expert Advice

If debtor finance is a solution you’re considering for your business, use the Invoice Market’s independent expertise and find out more about how it could benefit you and your business.

Help us to help you determine the best way forward. We specialise in supporting small and medium businesses.

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