Untapped potential

How did you start writing debtor finance? 

Lisa Wilson, Centrepoint Finance: By accident! I accepted an invitation from a Scottish Pacific BDM and after that meeting l conducted my own research. I was blown away by how big debtor funding is in the UK and USA and could see the potential for Australian businesses. 

Samantha Graham, QPF Finance Group: A new client specifically asked me for debtor finance, an area I had never really explored. In my mind, it was only for clients in trouble (based on an old-fashioned view from when I first started in finance). I hesitantly contacted Scot Pac and received significant help and information in setting up this small facility. It taught me a lot about what the product offers and opened my mind to considering this as a true alternate source of funding. 

Rebecca Barbe, Finance Solutions Queensland: Traditional bank working capital has a focus on security, and if a client doesn’t have or doesn’t want to provide security, the amount available unsecured is normally minimal. Debtor finance is the solution — it is more flexible in that the facility can grow along with the business without the need for additional landed security. 

How do you find your debtor finance leads? 

LW: From my existing database. Anyone who sells a product or service can benefit. Business owners with ATO issues. Those looking to expand their personal property portfolio but have an overdraft that is secured by their home. Or SMEs who sell to corporates and have to wait for a long time, 45 to 60 days, to be paid.  

SG: Same as any other finance option I provide — existing clients or referrals. It is just another finance product in my portfolio, to be used in the right application. 

RB: We’ve just reworked our website to have a stronger focus on industry, with one of our key offerings being debtor finance if it solves the client’s business problem. 

Any tips for brokers looking to break into debtor finance? 

LW: As brokers, it’s our job to educate clients on the suitability of products available, and debtor finance ticks a lot of boxes for SMEs. The arrangements are often very competitive with overdrafts yet have the advantage of not requiring security over landed assets, allowing a business owner to use equity in their home for personal wealth creation. There are also products for SMEs to assist with accounts receivable rather than employing someone to manage it for you.  

SG: Talk to a product specialist about how it works, because a lack of knowledge makes it impossible to discuss with clients. I’d definitely encourage brokers to actively involve their debtor finance BDM in client discussions. There are many product applications and a specialist may pick up on a client comment that a finance broker wouldn’t, and so determine one direction rather than another within the product.  

RB: Get educated about how it works. It’s a bit different from traditional banking products and knowing what kind of invoices can and can’t be used is a good start. 

What is the best thing about writing debtor finance? 

LW: The thanks l get from a client when they’ve been able to expand their business, pay off a tax debt or access the equity in their personal property to invest for their future. Debtor finance has been a suitable product to assist in all of the above scenarios and it’s a great feeling being able to facilitate that. 

SG: Seeing it used properly to help a business grow or even out cash flow.  

RB: The opportunity the facility provides clients in terms of growth is huge. Flexibility to grow as the debtor ledger grows is very appealing.