News & Analysis

Factoring on the rise as businesses seek cash relief

- June 13, 2013 2 MIN READ
The number of Australian businesses using factoring finance has risen to its highest level in five years, showing the growing popularity of debtor finance in the Australian market place, according to Bibby Financial Services, one of the world’s leading global debtor finance specialists.
Total debtor financing turnover in the March 2013 quarter was $14.6 billion, according to new data recently released from the Debtor and Invoice Finance Association (DIFA). This was made up of invoice discounting turnover, which hit $13.3 billion, and factoring turnover at $1.3 billion.
Total debtor finance turnover over the year to March 2013 was $63.1 billion, up 2.1% from March 2012, highlighting solid growth compared to overall business credit growth. Over the year to March 2013, business credit showed sluggish movement of 1.6 per cent growth and rose by only 0.2 per cent over April after decreasing by 0.1 per cent over March.
According to the DIFA March quarter statistics factoring client numbers rose to 1646 in the March 2013 quarter, the highest numbers since March 2008, and up from 1596 in the December 2012 quarter.
Gary Green, National Sales Director, Bibby Financial Services said: “Small and medium-sized businesses (SME) are facing a challenging cash-flow environment and they are looking at innovative ways to manage their cash flows such as debtor finance because they aren’t getting the funding support from the banks that SMEs have traditionally relied upon in the past.
“Looking ahead, we expect more SMEs to use debtor finance as we head into a busier season with wholesalers and manufacturers looking to fund orders and production and with official interest rates falling to record low levels, this will help to stimulate business confidence and investment, which will add to even greater demand for debtor finance to fund growth.
“Debtor finance is ideal for SMEs because it allows them to quickly convert unpaid invoices into cash. Businesses can leverage their accounts’ receivables, which is typically one of the largest assets on a business’s balance sheet.”