Leasing Newsletter


	InterPrac Leasing Newsletter-November 2007
	Dear Member, Cash Flow Finance And yet again another rate rise and the predictions are that we will experience more interest rate rises in the next 6 months. Having said that, the Australian Economy is still experiencing huge growth. Interest rate rises are affecting all sectors which enables us the opportunity to assist businesses via debtor finance. This type of funding is proving very effective for cash flow and wealth planning. Debtor Finance Holiday periods spell big business for Australian retailers, wholesalers and manufacturers: However for small businesses to employ extra staff, boost production resources and then wait for up to 90 Days for sales revenue can cause serious cash flow problems. Cash flow shortages further stressed by GST and day-to-day operating expenses can be a catalyst for business breakdown. How could debtor finance assist Debtor finance offers small and medium business operators access to a flexible source of finance which allows the unlocking of funds tied up in invoices, thereby of an immediately injecting cash. This service is also referred as invoice discounting. Traditionally businesses secure overdraft and line of credit to support the ongoing costs of the business. Such facilities are often secured against personal assets such equity on home or commercial property. Debtor finance is only secured against invoices where a small business can secure up to 90% of its unpaid invoices. Example John Stuart run a wholesale and distribution business of Arts and Craft products the business turnover is about $4 Mil a year. John often orders his products from manufacturers in China of which he has to pay 100% of the cost by the time goods are delivered to Australia. On arrival the goods are distributed to large retailers such as Target and similar well known large retailers. Generally invoices are paid within 60 and up to 90 days in some cases for small retailers. The sales and turnover are doing very well but unpaid invoices amounts to about $600k in busy times of the year such as Xmas. In the meantime John has to keep overseas orders paid, staff salaries on time, transport, insurance and quarterly due GST paid on time. These dead lines are often missed and cause interest and late payment penalties. John has an overdraft secured against his home of $200k but often is overdrawn. John took Debtor finance against his existing Invoices ($600k), secured a facility of 90% or $540k. This facility helped to pay off the current overdraft, get up to date with all bills and GST payments, reduced the pressure from the overseas manufactures for payments and most importantly freed up the equity on his property. John is now using his equity with his financial planner for wealth building and investments. The interesting part of this scenario is that the facility was organised with in 72hrs. The lender has also offered John additional funds if required against used plant and equipment the business owns. Common comments by business owners My sales are growing and I can’t afford it. The more I sell the less money I have. I went to increase my overdraft and they said no. I have just received an ATO arrears demand and have no funds. I can’t afford to buy stock. I would love some certainty to my cash flow. My customers ask for terms and I can’t afford to provide it. I want my home protected and separated from my business. I have contracts waiting, I just can’t afford. If you have clients making these statements, Cash Flow Finance could help. The next step: call InterPrac Finance Services 1800 700 666 for more details or if you are too busy one of our qualified consultant will be happy to contact your clients for assistance Yours sincerely Djamel Chettibi National Leasing Manager InterPrac Finance Services Pty Ltd Ph: 1800 700 666 Fax: 1300 361 587 www.interprac.com.au