In almost all cases where an SME has tax arrears, the Bank will be unwilling to advance further funds to assist the business and/or they will often withdraw existing working capital facilities. This often severely impacts its cashflow. The reasons behind such actions are rarely provided, but the stigmas of creditor pressure and ATO arrears mean that the lenders will always err on the side of caution. This is sometimes justified, however, the majority of the time it is merely a temporary cashflow issue that could be managed and addressed with the incumbent lender if they were prepared to work with the business.
To make matters worse, when they do provide finance to the business, it will almost always require some form of asset security any lending to be approved. This also means that credit will have a strict limit attached to it – often restricting a growing business.
This is where Debtor Finance or Factoring - a growing form of cashflow lending in the finance industry – comes into play. More and more businesses are working with brokers to find a flexible funding solution outside of the banks.
As James Watt from Approved Group Capital notes “I have been funding my clients finance from cars and homes through to business finance for many years now, but recently with the shift of the banks tightening the screws, I have had to seek other avenues to assist my clients. I knew of Scottish Pacific and FactorONE through one of my clients who already had finance with them, and that’s where I took a strong interest in the role factoring can play to my existing clients”
Sometimes all it takes is one example of how factoring can assist a business before you begin to see the clear and tangible benefits it can offer when put alongside standard business lending.
Some of these are:
- Lending against the business’ debtors book (Invoices) even when the business or management has a poor credit history
- Lending against the business assets without property security
- Assistance with collections of debts
- Funding lines grow as the business grows
- Potential to pay your suppliers upfront for discounted rates
- Pay your payroll on time every time
Here at FactorONE, from first contact with a potential client through to the relationship with our operations team, you will always have someone who takes time to help the business grow.
If you, or someone you know, is having issues with ATO Arrears, a wind up application and / or creditor pressure, please don’t hesitate to contact FactorONE ASAP to help find a solution.
