• 25% of existing customers in need of cash flow relief come to us after it’s too late.

How can you tell when your client is in financial stress?

• Enters into tax arrangement with ATO
• Extending their terms with their vendors
• Debtors slow to payment (days outstanding increasing)
• Extending creditor terms (paying upfront for stock when offering terms to customers)
• Asks for temporary overdrafts or short term funds
• Gearing an investment portfolio or other asset for cash out
• Growth is being stunted
• Trade debtor ledger is increasing

What can you do to help your situation?

• Incorporate debtor finance into your business
• Offer debtor finance to your debtors
• Win lotto

70% of all debtor finance clients in Australia today are manufacturers or wholesalers. Current industries that are ripe for debtor finance are Transport and Labour Hire (especially temporary). Others industries that use debtor finance include Textile, Clothing & Footwear; Printers; Panel Shops; Engineering; Plastics Manufacturing.
The problem right now for small business is that banks don’t want to lend money. If you’ve got a business that’s growing and you want to continue to fund it then you’re going to have to rely on confidential debtor finance. If a business uses confidential debtor finance properly, cost is minimal.

Debtor finance such as factoring and confidential debtor finance (discounting) are counter cyclical, thus we expect business to increase substantially in coming months.
Industries are affected by cash flow problems in downturns. The mining industry and trucking industry are examples of affected industries. However, everyone’s finding problems in meeting that cash flow shortfall. The debtor finance industry meets a niche that the banks don’t.

The bigger players are going to stretch their repayment terms out and that in turn affects the smaller players, so everyone suffers with their cash flow. Dun & Bradstreet show businesses took 55 days on average to settle bills with other businesses in the September 2008 quarter, almost four weeks beyond the standard term.

Now that we are officially in a recession, debtor finance will become a more mainstream financial tool. In tough economic times business cash flow dries up, business owners tend to look to a number of assets on their balance sheet to generate additional cash flow. With the property market not increasing in the last 12 months as it has in previous years, that’s when business owners look to the debtors to get access to cash to get through a difficult period. Businesses are taking longer to pay and that’s placing cash flow strains on business.

At Tandem Uehling, we deliver cash flow solutions that you can offer to your customers. If you aren’t aware how we work as a profit centre to financial planning groups or accounting firms, Contact us today so you don’t let opportunities pass you by.