Debtor Finance

Debtor Finance is a lending product that enables a business to unlock equity from their receivables. The product will not suit every industry however once the product is understood, it offers an alternative to traditional lending products and generally there is no personal guarantee required from the Directors of the company. Whilst there are many different names for debtor finance, the underlying principals are the same. Blackbird Capital needs to understand your business and what you are trying to achieve. This may be to pay tax debt or expand the business or simply provide a cashflow injection to the business.

80% of the value your outstanding invoices can be made available to you within 24 hours.

Let’s assume you import Moped bikes from overseas.

You work out your manufacturing costs and build in your margins to land the product into Australia. The 90-day period to transport the stock and clear customs into Australia can be financed (Trade Finance). You the sell the stock to a retailer and raise an invoice. This invoice is what you will be using as security for the debtor finance. In certain circumstances, real property may be required.

Your landing price for the Moped Bike is $2,000 and you sell that Moped Bike to the retailers for $5,000. Your retailers usually pay you between 45 – 75 days later meaning you have cash tied up in that transaction and you can’t purchase any more stock for other customers until that invoice is paid.

Debtor finance will release 80% of your $5000 invoice amount, meaning you receive $4000 against the invoice within 24 hours (with the balance on full payment by the debtor within 90 days). Now you have $4,000 and you can immediately go and buy 2 Moped Bikes with your $4,000 and sell them for $10,000.

You can then receive $8,000 against this second invoice and you can buy four Moped Bikes and so on.