Debtor Finance

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Debtor Finance

Get quick & easy access to funds owed by customers. Improve your cash flow, no property security required.

Unlock up to 95% of Invoice Value in 24 Hours


A Debtor Finance facility, also known as an Invoice Finance facility, are forms of business cash flow finance that allow you to use your unpaid invoices, or debtors, as security for a business loan. Debtor Finance, Invoice Finance, Factoring and Invoice Discounting are all forms of debtor finance.

Who can use Debtor Finance?

Provided your business is invoicing other Australian businesses or organisations, and the invoices are outstanding, you can qualify for debtor finance. If your business doesn’t have any debtors, for example if you are a retailer, whose customers pay at the point of sale, then debtor finance may not be suitable.

Debtor finance may also be used by businesses who are newly formed, or who are not currently profitable, those experiencing cash flow problems, challenging business conditions or turnaround, or where the overall debt position makes the business unsuitable for bank lending. 

Debtor Finance is, simply a line of credit linked to and secured by your outstanding accounts receivable. If your business supplies products or services to other businesses on standard trade credit terms, a Debtor Finance or Invoice Finance Facility can help.

Debtor finance is a preferred option for many fast growing, capital constrained businesses, because it is based on the value of your debtors, a debtor finance facility naturally grows with your business.

What form of Security do you need for a Debtor Finance Facility?

Debtor finance is a form of asset finance, as the asset is the debtors, unlike a bank loan, debtor finance doesn’t usually require any property security. In some cases, such as where you invoice large corporations, director guarantees may not even be required.

To get a bank loan your historical trading results, cash flow, length of time your business has been established and the asset backing of the directors are all scrutinised. Yet with a debtor finance facility, the lender relies on the quality of the debtors in making the loan, this can result in debtor finance being much quicker and easier to obtain than a bank loan and easier to service than an unsecured short term loan.

How does a Debtor Finance Facility work?

Factoring and Discounting are two debtor finance options for businesses to improve their cash flow by accelerating the cash cycle. Under a Factoring arrangement the financier additionally manages its client’s sales ledger and collection of accounts. Therefore, under a Factoring arrangement the debtor is aware of the arrangement and makes payments directly to the financier.

Invoice Discounting can be disclosed or undisclosed, with an undisclosed facility the debtor is unaware of the arrangement and makes payments as per usual, but as the debt is owned by the financier, the client manages the collection process and then passes the revenue collected to the financier.

Generally, a Discounting arrangement would be utilised by larger businesses as they have the in-house resources to manage receivables collections as well as the reporting requirements of the financier. Conversely, smaller organisations often prefer a Factoring arrangement as they pass over the responsibility of managing receivables collections, allowing management to concentrate on other business functions such as growing the business.

One of the attractions of both Discounting and Factoring is that they are self-liquidating facilities, meaning that a business isn’t taking on additional debts, but rather accessing money that is already owed to it. The goods or services have already been provided, and while the facility needs to be repaid, this should take care of itself as a matter of course as the company’s debtors settle their invoices over time.

Benefits of Debtor Finance

According to research undertaken by the Debtor and Invoice Finance Association (DIFA), Australian businesses recognised the three key benefits of debtor finance to be;

  1. Accsess cash within 48 hours (usually varying between 75-95% of the value of an invoice), allowing the business to accelerate growth.

  2. The ability to utilise the improved cash flow position to obtain early settlement discounts from suppliers/creditors (up to 5%) which may help offset the cost of the facility.

  3. A reduction in management time spent on chasing slow payers (through a Factoring arrangement), allowing managers of the business to concentrate on areas more appropriate to their responsibilities, such as driving new business.

Why Use a Finance Broker to access debtor finance?

Debtor finance facilities can range from small to large. At one end, consider a start-up small to medium business, they may be requiring a finance facility to bridge a cash flow gap between a weekly or fortnightly cycle of expenses, and the 30 to 60 day terms of their invoices. A medium sized firm may be looking to fund their rapid growth, or the fulfilment of a large order. At the larger end of the market large companies can utilize their receivables to secure multi-million-dollar funding lines. There are a large number of debtor and invoice financiers operating in the Australian market, each different financier will cater to a particular size or style of transaction.

Only a broker can help you navigate and bring appropriate lenders to the table. Brokers will help determine the right lender from the list of customer requirements saving time and legwork. A broker can advocate with the financier and can help bring competitive tension to the process which can result in a better outcome for the customer. 

  • Maximum Loan is up to 95% of the invoice value

  • Loan Term Typically up to 90 days

  • Interest Rates Starting at 0.5% per month

  • Comparable to unsecured business loan in terms of rates/costs

  • Time to Fund As little as one day


NFG Finance – we are here to help:

At some stage most business go through a period of rapid growth where cash flow doesn’t come in quick enough. NFG Finance is here to assist, we specialise in helping start-up businesses and rapidly growing business to access the finance they need to grow and succeed. Every business is different and each financier has a preferred customer profile. The reality is that some customers, even if they are doing ok, won’t currently qualify with some lenders, this is why we provide finance from wide range of 40 lenders.  

Don’t waste your time or damage your credit rating applying to your bank. They will generally only assist where you can show them 3 years of profitable financials, and are a home owner with plenty of equity, as well as having a perfect credit file. Even if you meet bank policy response times can be weeks at a time, it is up to you to follow them up. Bank delays and refusal will not only waste your time, but can impact your credit file. Don’t risk your equipment, your business or your credit rating, finance is an important factor in the success of your business, this is why we recommend you use a finance broker. 

As your finance broker we will take the time to understand your business, your goals and your challenges. We will bring you suitable finance options and then arrange the financing for you in a timely manner. For more information on why we think you should use a finance broker and why we think you should choose us as your finance broker, please read the article linked below. If you want to talk about your finance options please contact us on 1300 737 600.


 NFG Finance – Specialise in Providing Finance Solutions for Small and Medium Businesses:

Often small and medium businesses fall through the cracks of bank policies, for reasons including:

  • Being a start-up business,

  • Being a renter rather than property owner/buyer,

  • Not having regular cash flow,

  • A lack of, or limited credit history,

  • Past credit issues, bad credit rating or defaults,

  • Not having recent financials completed,

  • Financials showing losses (trading, start-up or tax losses),

  • Not having enough lending to be managed by a bank. 

Please contact us today to discuss your finance options. 


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