SMEs under pressure as debtor finance rises

by Adam Smith14 Mar 2012

Debtor finance is on the rise as businesses struggle against the strong Australian dollar.

Figures from the Institute of Factors and Discounters show a 4% rise in debtor finance for the December 2011 quarter, representing a 4.6% year-on-year rise. Meanwhile, total business credit rose only 1.4% for the year.

Oxford Funding head of debtor finance Rob Lamers said businesses were being put under cash flow strain by factors such as the high Australian dollar, rising labour costs and interest rates.

"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," Lamers said.

Lamers said access to debtor finance could prove particularly appealing to businesses experiencing "seasonal fluctuations".

Related stories:

Stressed SMEs give boost to debtor finance

Debtor finance clients gear for expansion

Brokers failing in debtor diversification