Stressed SMEs give boost to debtor finance

by Adam Smith21 Nov 2011

Debtor finance is on the rise amid tough business conditions, a lender has claimed.

Bibby Financial Services national head of sales Gary Green has pointed to data showing a 4% increase for debtor finance in the September quarter. Green said the rise was largely expected, given business conditions.

"The growth exhibited in debtor finance is not surprising, with small businesses facing increasing pressure. They are under higher stress, have more uncertain cash flow than a year ago, face longer delays being paid and are coping with more difficult market conditions and reduced access to finance. Increasingly, small businesses are using debtor finance as a way to manage cash flow," Green said.

Data from the Institute for Factors and Discounters shows a nearly two-fold increase in factoring turnover in NSW and the ACT over the past year. Green said NSW small businesses are embracing factoring due to restricted access to funding.

"Some businesses are growing at a rapid pace as a result of the recently strong Australian Dollar, and factoring allows them to improve their cash flow and take advantage of growth opportunities," Green said.

Bibby Financial Services has also seen growth, with business increasing 25% over the past year, Green said. Part of this growth he put down to CBA's withdrawal from the debtor finace market, but Green said the "SME landscape" was also encouraging growth in the field.

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