Small Businesses Turn to Invoice Discounting as Access to Bank Credit Tightens
Announcement posted by THE INTERFACE FINANCIAL GROUP 25 Sep 2011
Sydney, NSW (PR Wire – 26September 2011)– The Interface Financial Group (IFG), a growing source of alternative funding for Australian small businesses, announced that the company offers support to small business owners who are strugglingto obtain conventional bank loans as a result of the tightening of credit criteria in the Australian banking sector. IFG provides short-term financial resources including single invoice factoring to companies in Australia, New Zealand, the UK, Ireland, the United States, Canada, and Singapore
For banks, the small business sector is becoming a less profitable segment for lending due to the increased risk. This adversely impacts the banks' Return on Capital ratios because not only arethere generally higher losses from this segment, but thebanks are required to carry more capital on their balance sheets in support of small business loans. The combination of these factors can lead the banks to target 'safer' assets for lending volumes, particularly residential mortgages.
David Hechter, chief operating officer for IFG in Australia said that small business owners need to explore alternatives to the banks. “Most Australian small businesses have the attitude that if they cannot obtain a loan from a bank, then they are out ofluck and simply find another way such as borrowing from friends and family. What they do not realise is that there are a number of factoring companies in Australia who target the SME (small and medium sized enterprise) sector. In the invoice discounting sector, credit providers are much more concerned about the quality ofthe SME's customer invoices than the balance sheet of the SME itself.”
Factoring and invoice discounting facilities involves the purchase of accounts receivablewhich provides superior benefits to small businesses as compared to loans.These debtor factoring products allow a small business to use the facility only as required without having to be locked in for a particular term. In addition, a factoring facility can grow in line with the value of the accounts receivable as opposed to having a maximum limit linked to the asset value of physical collateral such as property.
Factoring belongs to the family of debtor finance products where a company can use one of its most valuable assets – its strong customer base – as a source of cash flow by selling these invoices. With invoice factoring, there are no minimums, no maximums, no long-term commitments and no lengthy application process.
About The Interface Financial Group (www.ifgnetwork.com.au)
The Interface Financial Group (IFG) provides short-term financial resources includingcommercial factoring(invoice discounting). IFG launched the Australia operation in 2006 following the success of its New Zealand businesses which commenced in 2004. IFG's innovative products also includes spot factoring – the purchase of a single invoice or number of invoices. IFG does not require the whole debtor book to be financed.
The IFG Network is the funding arm of The Interface Financial Group providing capital and transactional support to IFG's international office network. IFG has grown to over (150) international offices in Australia, UK, the United States, Canada, Ireland, New Zealand, and Singapore. Each IFG office is managed on a local level, providing immediate service to clients with local knowledge and experience.This makes IFG unique to all other factoring companies in the Australia. The IFG team has substantial business experience and expertise in numerous diverse areas, including accounting, finance, law, marketing, banking, etc.
Headquarters:
The Interface Financial Group
Suite 1, Level 3, 179 New South Head Road
Edgecliff, NSW 2027
T: Toll Free: 1300 957 900