Australian Money Forum

[johnkerr]

Hey guys,

One of my mates from way back has asked for my help with his new panel repair shop. I've set him up with these debtor finance dudes as they seem to specialize in this. It's my first instance dealing with debtor finance so I just thought I'd share my opinion.

Basically how it works is they front you the majority of cash for customer invoices, I like to think of it as cash for cash flow, in a business like my mates where a lot of your customers are insurance companies, it can take months for you to get paid for a job. While the money is good, if you're just starting out and you're spending cash on labour and parts it's pretty hairy. For him I think it's perfect, although we may wean the business off it in a few years because it does eat into your final profits. So it worked well for us, but I'm not sure how well it would fit other industries