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Get working capital for your home without using your home as security

When a business experiences a cash flow shortage the pressure on the business and its directors can be immense. Trying to juggle creditor payments, tax bills and meet the ongoing operating costs like rent and wages can be highly stressful. It can also provide a major distraction for business taking focus away from service delivery and business development.


Traditionally businesses put in place an overdraft facility to manage their peaks and troughs but this usually requires directors to put up their own home as security. While this may allow a lower cost of funding it does create a number of limitations.


Supporting growth

The downside of an overdraft facility is that it is not linked to business growth. It is linked to value of the property supporting it. If a business is experiencing substantial growth then it is likely to also experience cash flow difficulties as it attempts to fund that growth through additional purchases and employing more staff. Factors like slow debtor payments can then amplify this situation. Unless the directors have substantial real estate holdings it is likely at some point that the businesses cash requirements will exceed the facility.    


Growing personal wealth

It your property is tied up in your business to support an overdraft facility this places a cap on your ability to grow your personal wealth. If that equity was not tied up in your business you may be able to use it to acquire additional property or shares. After all surely the reason most of us go into business is to create wealth. There has to be some reward at the end of day.



A way of getting around this issue is the use of a debtor finance facility. Debtor finance allows you to access cash for your business against invoices you raise to your clients. In general terms it is possible to access between 70 - 80% of the invoices' face value within 24 hours. Thus, providing immediate working capital for your business. The benefits of this type of facility are:


·         It grows with your business. As your sales levels grow you have the ability to access additional funding

·         It is quick, with payment against invoices generally made within 24 hours

·         It does not need to be supported by property thus freeing up these assets for alternative use

·         It can remove the need to provide settlement discounts to encourage early payment by debtors

·         Can reduce the likelihood of bad debts

·         May provide your business with the ability to take advantage of early payment discounts offered by creditors


A long time ago there were negative associations with debtor financing, but the market has significantly changed. The market has now become highly sophisticated with a number of experts who specialize purely in this area and work with small businesses to develop an appropriate structure for them. In fact debtor financing is now used by many successful businesses.


Call Greg Carroll on 07 3666 0110 or  contact us to find out if this type of facility could suit your business.