Cash Flow & Debtor Funding Finance FAQs

Cashflow Finance is also known as Factoring. Despite its unusual name, the concept of Factoring is extensively used throughout the world, particularly in Europe, United Kingdom and USA. Here in Australia, Factoring has been available for a few decades, however, it is only recently that Australian business owners are discovering the many exciting benefits this type of finance offers.

Bank loans and overdrafts won't always stretch to cover your finance needs especially when new business opportunities are within your grasp. Access to cash flow is a vital ingredient for developing a successful business and Factoring is generally recognised as an ideal way to achieve this.

So What is Factoring?
The dictionary tells us that a "factor" is someone who transacts business for another person. Factoring through AGM Williams & Co. means having your sales invoices (for goods/services provided to your customers) assigned to a financier. We can then provide a professional customer administration service which actively manages the collection of your customers' payments on your behalf.

In tandem with this service we also provide highly competitive financing, usually up to 80% - 90% of the value of your outstanding invoices. (The remaining invoice balance is promptly paid to you after we receive your customer's cheque).

How does Factoring help my business?
Our cashflow finance provides immediate funds for business growth and allows your management to concentrate on the core activities of running the business. By improving your cashflow, you maintain control over your business and can enjoy:

Reduction in administration overheads.
Increased sales.
Supplier discounts.
Increased profits.
Bigger orders by offering affordable credit terms.

What about Start-up Businesses?
We are able to assist new business ventures. Ideally, your annual credit sales should be exceeding $200,000
(or be able to reach this level in the short term).

Will my business qualify?
A key requirement to qualify for Factoring is to ensure that your debtors ledger does not carry any unreasonable commercial risks. We have a few guidelines to help us here:-

Invoices should be for goods/services which have been fully delivered/completed. (This excludes progress payments on unfinished jobs).
If asked, your customer should be able to confirm that the invoice is OK and that no dispute exists.
Invoices which are older than 90 days (from the end of the month in which they were issued) are not eligible for financing.
Extra care is needed where any customer invoices represent more than 20% of your total debtors ledger. Generally, when one customer exceeds 25% - 30% of the ledger, the level of normal funding may be reduced.

Most businesses in many industries easily qualify for our Cashflow Finance but please call us if you would like
your circumstances reviewed.

What will my customers think?
Your interaction with customers will remain as before. Our role will simply be to put the accounting side of your relationship on a more professional footing. Whilst we are handling the administrative functions, your own personnel will be free to attend to your customers' needs more efficiently.

How will outsourcing my Debtor administration benefit me?
Our full administration service includes the preparation and mailing of monthly statements to your customers, issuing reminder letters and follow-up telephone calls (if necessary) and receipt, allocation and banking of customer payments. Detailed reports are regularly prepared for you which keep you fully informed on the status of your customer accounts. (24 hour access available via the Internet). The investment in time and labour which your business is currently spending on these tasks can be significantly reduced.

Are different types of Factoring available?
Yes, there is a broad range of options available.
Full Service
A full credit management and collection service is provided by us. Your sales ledger administration is completely outsourced. This facility is ideal for companies seeking a streamlined Head Office environment and allows your resources to be fully concentrated on increasing sales/production activities.

Co-operation Service
We provide a full credit management service but you actively assist us with the follow up of invoice collections. This facility is preferred by companies who require a regular opportunity to maintain direct contact with their most recent customers.

Confidential Service
We recognise that some companies already have experienced in-house debtor administration which they wish to fully utilise without our assistance. This service allows our client to obtain cash advances against unpaid invoices but we take a backseat role which is undisclosed to your customers. Please call us to discuss how we can tailor a facility to suit your circumstances.

Do I need to provide Real Estate security?
Our finance is secured primarily by your debtors ledger. Real estate security is not required and this is a major point of difference when comparing Factoring with other types of finance.

But I thought Factoring a "last resort" finance!
Not at all. Factoring is an excellent financial tool for businesses with good growth prospects and sound management. It is certainly not a lifeline for struggling companies. Another "old chestnut" is that factoring is too expensive. In reality, the combination of competitive interest rates and cost effective debtor administration makes Factoring very affordable.

Other facilities available to you include:

For further assistance, please don't hesitate to contact us.

Cash Flow & Debtor Funding Finance FAQs

Funding Methods

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