Debtor finance popularity grows as cash flow pressures bite business
Announcement posted by Oxford Funding (Bendigo Bank) 13 Mar 2012
costs and a strong Australian dollar are increasingly looking to debtor finance as a means to address their cash flow challenges, new figures show.
Institute of Factors and Discounters (IFD) statistics reveal that total Australian debtor finance turnover in the December 2011 quarter was $16.3 billion – a four per cent increase from the preceding September 2011 quarter. Turnover for the 12 months to December 2011 was $61.4 billion – up 4.6 per cent from the 12 months ending December 2010.
By comparison, total business credit is rising more slowly than debtor finance, with recent RBA statistics showing that business credit increased by just 1.4 per cent[1] over the year to January 2011.
Rob Lamers, Head of Debtor Finance of Oxford Funding (a wholly-owned debtor finance subsidiary of Bendigo and Adelaide Bank) said the growth in debtor finance, especially in the SME sector, was being driven by an increasing number of businesses looking for a more efficient way to manage their cash flow.
“Factors such as economic pressure from the continued strength of the Australian dollar, high wage costs and interest rates are putting strain on the cash flow of many businesses,” said Lamers.
“Additionally, property assets are not increasing as much as they have historically, so alternatives such as debtor finance, which is not secured by property but by a business’s assets, become more viable.”
“Access to funding that scales with the growth of a business’s sales is especially appealing for businesses seeking this flexibility for seasonal fluctuations.”
The IFD figures also reveal that factoring is leading the way nationally, with total factoring finance provided to businesses increasing 42.3 per cent in the December 2011 quarter over the same 2010 quarter.
“With our ability to tailor both our factoring and invoice discounting solutions around businesses’ requirements, Oxford is able to cater to a broad market in search of specialist cash flow funding,” says Lamers.
“This explains why our 16.6 per cent growth in total turnover from calendar years 2010 to 2011 is ahead of the industry average.”
New South Wales and ACT businesses made the most use of factoring and discounting solutions, accounting for 38 per cent of total turnover. They were followed by Victoria (28 per cent), Queensland (15 per cent), Western Australia (11 per cent), South Australia and the Northern Territory (8 per cent) and Tasmania (0.2 per cent).
ENDS
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, product range and commitment to best practice service delivery. Oxford is a member of the Institute for Factors and Discounters of Australia and New Zealand (IFD).
About Debtor Finance
Debtor finance provides businesses with immediate cash by releasing funds tied up in their unpaid sales invoices. This flexible line of credit allows businesses to manage their cash flow and to meet everyday creditor and payroll requirements, without a bank overdraft or real estate asset security. For more information, see www.oxfordfunding.com.au.
[1] Reserve Bank of Australia. Financial Aggregates. Jan 2012. http://www.rba.gov.au/statistics/frequency/financial-aggregates.html