We spoke with Bernadine Geary, Director, Cashflow Finance at Fundamental Business Finance, who provided some insights to the shifting perception of debtor finance in Australia and in the U.K.
Bernadine is a qualified chartered accountant, a graduate and Associate of the Institute of Credit Management. She has a wealth of experience in the trade & debtor finance industry and has worked both in Australia and in the UK. She has also established her own successful finance brokerage house and is regarded as an industry leader.
I started life as a Chartered Accountant and went into credit management in the UK where I studied with the Institute of Credit Management in London. I discovered trade finance whilst I was working with a company in London, where I attached a purchase order and invoice finance product for them. Debtor finance just made sense to me as I could see how this helped my clients. Credit management is all about ensuring that the invoices a business raises for goods or services provided are paid and done so in a timely manner. Debtor finance goes hand in hand with these principles by accelerating the cash flow held in unpaid invoices. The life of a business's trade cycle and being able to assist in managing this had motivated me to start my own trade and debtor finance business in the UK.
The perception of debtor finance in Australia and the UK differed greatly 10-15 years ago. The perception of using debtor finance in London was seen as an everyday cash flow management tool, yet in Australia, debtor finance was perceived as a lender of last resort and just "too hard" to do. Over the years however, particularly over the last five years, with the evolution of information technology and new lenders in the FinTech space such as Waddle, businesses are starting to realise that they can get access to working capital in a fast and efficient manner- more often than not easier than traditional lending such as overdrafts and commercial bills. There’s been a shift in how debtor finance is perceived, as now it’s seen as the smart way to improve a business's cash flow.
With the emergence of fintechs, borrowers now have far more choice than ever before. There is a plethora of choice in the market from your traditional banks through to fintechs such as Waddle. This is great for business customers but it can also lead to confusion and often an erosion in their credit score as they search the internet for the right lender. At Fundamental Business Finance we understand the lenders in the cash flow finance space and we choose lenders that provide the best solution for our client. The best solution is customer-centric, a combination of reasonably priced funding and a solution that makes it easy for our clients to do business with them.
Any business that sells to another business on credit terms is suited to debtor finance, however businesses who are in construction have more difficulty in this area due to the progress claim nature, as there isn’t a fulfilled contract in place and it can cause issues in the collection of the invoice if the client gets into financial difficulty. On the other hand, importers; wholesalers; service providers; labour hire; transport; and plant & equipment hire, are all ideal businesses for debtor finance. Debtor finance will assist these clients to bridge the gap between receiving funds from their customers and having to pay suppliers or employee wages on time.