Two-speed Economy Exacerbates Small Business Finance Woes
Announcement posted by THE INTERFACE FINANCIAL GROUP 14 Jun 2011
Invoice Factoring Helps SME's in a Range of Industry Sectors
Sydney, NSW (PRWire – 15 June 2011) –The Interface Financial Group (IFG), a growing source of alternative fundingfor Australian small businesses, announced that the company offers working capital finance to small businesses on both sides of the "two-speed" economy. IFG provides a short-term finance facility including singleand batch debtor factoring to companies in Australia, New Zealand, the UK, Ireland, the United States, Canada,and Singapore.
In National Australia Bank's monthly survey of business managers, the May results substantiate the increasing gap between businesses exposed to the mining sectors and other industries such as manufacturing, construction and wholesaling. The high Australian dollar was a major driver of the more pessimistic sentiment in the non-mining industries whereas the robust mining sector turned in the strongest results in the history of the survey. NAB's index of both business conditions and business confidence fell overall.
Small businesses are feeling the challenges regardless of which sector they are in according to David Hechter, IFG's COO in Australia. "Small businesses who are providing services to the mining companies have great growth opportunities, but the payment terms of 30-60 days are forcing them to over-trade when they need to stay current with their suppliers in under 30 days or pay cash-on-delivery. On the other side, small businesses in manufacturing and construction are seeing their customers drag out payments as a result of the slowing economy and general uncertainty. In uncertain times, large companies simply hold onto their cash a bit longer which is a significant challenge for the small businesses who serve them. This is why debt factoring and invoice factoring are becoming such popular options for small businesses - cash is still king regardless of which side you are on of the two-speed economy."
Factoring is a financial service used primarily by small and medium-sized entities (SME's) who find it challenging to raise working capital finance from conventional sources such as the banks. Many of the business loans in Australia that have been extended to small businesses have the collateral backing of a business or personal property. As property values have also declined in Australia, small business owners are increasingly looking to alternative providers of finance who do not require property security as part of extending a line of credit.
Debtor factoring involves the use of accounts receivable (invoices and progress claims) as the security for the finance provided by a factoring company. The factoring company provides an advance to the SME based on the size of its invoice(s) and then collects the total amount at the time when the SME's customer pays the invoice. Unlocking the cash tied up in invoices becomes a significant catalyst for a SME's business growth and/or survival depending on the overall health of their business and the environment in which they compete.
Invoice factoring is structured as a 'buy/sell' transaction which allows the SME to use the funding only whenrequired without having to be locked into a long-term contract with minimum fees. With 'spot' factoring, there are nominimums, 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 including invoice factoringand invoice discounting. IFG launched the Australia operation in 2006 following the success of its New Zealandbusinesses which commenced in 2004. IFG's innovative products also includes spot factoring – the purchase of asingle invoice or group of invoices, but IFG does not require the whole debtor book. IFG Network is the funding and operational arm of The Interface Financial Group providing capital and transactionalsupport to IFG's international office network. IFG has grown to over (150) international offices in Australia, UK, theUnited States, Canada, Ireland, New Zealand, and Singapore. Each IFG office is managed on a local level, providingimmediate service to clients with local knowledge and experience. This makes IFG unique to all other factoringcompanies in Australia. The IFG team has substantial business experience and expertise in numerous diverseareas, 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