Debtor Finance is, quite simply, a line of credit linked to and secured by your outstanding accounts receivable. If your business supplies products or services to other firms on standard trade credit terms, then Scottish Pacific can help.
Debtor finance facilities have the ability to come coupled with a debtor administration service designed to improve debt turn and lower interest costs through ensuring prompt payment by debtors. Services can be provided undisclosed or disclosed to debtors.
There is a multitude of reasons why businesses select debtor finance, however, the most common to be companies experiencing strong growth. These businesses find that other forms of funding cannot keep up with their growth and hinder their expansion. Debtor finance facilities are dynamic and grow in line with turnover, providing additional funding as the business needs it. Other common reasons include no real estate security, allowing those without brick and mortar assets to borrow for the business against their business, keeping personal assets secure for the future; director preference to outsource the debtor administration to free up the time to focus on strategic decisions and growing the business.
Debtor finance is well suited to manufacturers, wholesalers and distributors within the fashion industry as lead times are typically high stressing the cash flow of these businesses and prohibiting growth. Debtor finance facilities work to bridge this gap, often providing the business with funding of the debtors ledger 60 to 80 days earlier than they would expect without a facility.
In a nutshell debtor finance works by businesses generating sales as normal and invoicing their customer, a copy of that invoice is then sent to Scottish Pacific, who provide up to 80 percent funding of that invoice overnight. When the debtor pays Scottish Pacific returns the remaining 20 percent fewer fees.
An analogy to understand the process would be the example of the chair. Without Scottish Pacific Finance a business owner buys a chair for $20. They then sell the chair for $50 and wait for payment to buy another chair. With Scottish Pacific Finance, a business owner can buy a chair for $20, sell the chair for $50, but rather than wait to get paid, receive $40 the next day, allowing the business owner to buy two more chairs.
Scottish Pacific deals with over 30,000 debtors around New Zealand and has significant debtor intel that can assist businesses, lowering the risk of non-payment.