Businesses continue to favour debtor finance

The flight to alternative financing strategies, such as debtor finance, to fund growth continues with new figures released by the Institute of Factors and Discounters (IFD) revealing strong uptake of debtor finance facilities amongst businesses, particularly those in the wholesale and manufacturing sectors.

For the five years ending December 2009, total debtor finance turnover doubled from $31 billion in the year ending December 2004 to $63 billion in December 2009. Over this period, the standout adopters of debtor finance were wholesalers and manufacturers.

In December 04 wholesale trade accounted for 36% of discounting turnover and 17% of factoring turnover. In December 09 wholesale trade made up 41% of discounting turnover and 20% of factoring turnover. This represents an increase of 12% (discounting) and 15% (factoring).

Likewise, in December 04 manufacturing accounted for 17% of discounting turnover and 18% of factoring turnover.  In December 09 manufacturing was 19% of discounting turnover and 24% of factoring turnover. This represents an increase of 2% (discounting) and 25% (factoring).

Much of the recent demand is for full service debtor finance facilities (often referred to as Factoring) which Rob Lamers, chief executive officer of debtor finance specialist Oxford Funding (a division of Bendigo and Adelaide Bank Limited), attributes to the growing demand by businesses for assistance with debt collection to maintain healthy cash flows to fund growth.

For the quarter ending December 2009, industry turnover was up for both factoring and discounting, with Queensland ($2,997.2 Million), WA ($1,448.7 Million) and NSW/ACT ($5,753.2 Million) being the main contributors to the increase. Industry sectors driving the growth during this quarter by total debtor finance turnover were wholesale trade, manufacturing and labour hire.

Commenting on the report, Lamers said, "Debtor finance has enjoyed strong growth over the past ten years, averaging an increase in turnover in excess of 20 per cent year-on-year. Our discussions with a number of industry sectors showed customers that make the decision to open a debtor finance facility tend to be long term advocates of the product and are maintaining facilities as a flexible source of funding to support their business growth.”

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About Oxford Funding

Oxford Funding, a wholly owned subsidiary of Bendigo and Adelaide Bank Limited (ASX: BEN), is a specialist provider of debtor finance or cash flow solutions to small and medium enterprises. Since its inception in 1994, the company has continued to remain at the forefront of the Australian debtor finance industry due to its flexibility, innovative product portfolio and commitment to best practice service delivery. Oxford is a member of Factors Chain International (FCI). www.oxfordfunding.com.au