Why Debt Factoring?
Improved cash flow
Maintain steady, reliable cash flow to fund daily operations, invest in growth, and take advantage of new opportunities.
Flexible funding
Access capital tied up in unpaid invoices quickly and easily - with a facility that scales as your business grows.
No need for property security
Debt Factoring doesn’t require your home or personal assets as collateral, giving you greater peace of mind.How Debt Factoring Can Help Your Business
Debt Factoring gives your business access to working capital tied up in unpaid invoices – without waiting for customers to pay. It’s a flexible solution that helps you manage fluctuating cash flow, cover rising or unexpected expenses, and invest in new opportunities for growth. Plus, with the option to outsource your accounts receivable and collections, you can focus more on running your business.
How Debt Factoring Works
Debt Factoring is a form of Invoice Finance that lets you unlock working capital by leveraging the value of your unpaid customer invoices. With ScotPac, you can access up to 85% of the invoice value as an advance, with the remainder, less any fees, paid once the invoices are settled.
Unlike some other Invoice Finance options, Debt Factoring is a full-service facility. That means ScotPac manages the collections process on your behalf, so your accounts team can focus on growing the business, not chasing payments.
Award winning Debt Factoring
As the largest non-bank lender in Australia, ScotPac brings the best of both worlds: the speed, flexibility and ease of a specialist lender combined with the reliability and knowledge of a major finance provider.
We help businesses in any industry get the funding they need.
Is it for you
Debt Factoring may be the ideal finance solution for your business if you need:
Quick access to working capital
With funds available in as little as 24 hours from approval, you can access the working capital you need – when you need it.
Unlock tied-up cash
Turn your unpaid invoices into cash flow to support day-to-day operations or invest in business growth.
Flexible business financing
Debt Factoring provides a flexible line of credit that scales with your business – no need to renegotiate or reapply as you grow.
Debt collection assistance
With full-service Debt Factoring, ScotPac manages the collections process so you can focus on running your business.
If you’re not sure whether Debt Factoring or Invoice Finance is right for you, speak with a ScotPac lending specialist today to find the best solution for your business.
Frequently Asked Questions
HOW DOES DEBT FACTORING ACTUALLY WORK?
Debt Factoring is a flexible and quick finance solution to help businesses manage their cash flow. Your business can select the invoice or invoices that are outstanding and upload them through our online platform. Within 24 hours, you will receive the agreed percentage of the value of those invoices as a lump sum, with the rest of the capital provided once the invoices are settled – less any applicable fees.
WHAT IS THE DIFFERENCE BETWEEN DEBT FACTORING AND A BANK LOAN?
Traditional bank loans and overdraft facilities often require real estate or another high-value asset to be used as collateral. Debt Factoring does not require any form of security other than the unpaid invoices being funded. This allows you to get paid faster for the goods and services your business has already provided.
Traditional bank loans also involve slower, more cumbersome application processes, while Debt Factoring can provide a cash advance within hours of approval. Lastly, bank loans come with fixed monthly repayments and interest charges, whereas Debt Factoring does not – instead, a small percentage is charged as a facility fee.
IS DEBT FACTORING A SHORT TERM OR LONG TERM SOLUTION?
Debt Factoring can be used as a short-term solution to help your business improve cash flow – for example, to cover an unexpected operational expense or purchase stock. It can also be used as a long-term arrangement to support ongoing growth and expansion.
WHAT SORT OF BUSINESS CAN ACCESS DEBT FACTORING?
This business finance solution is suitable for small and medium-sized businesses experiencing rapid growth. Limited companies, sole traders, partnerships, and start-ups are all eligible for Debt Factoring as long as they generate over $10,000 in sales every month. However, only companies that sell to other businesses, as opposed to direct to consumers, can access Debtor Factoring.
WHAT DOES FULL SERVICE MEAN?
Full-service facilities mean that our experienced team will carry out all accounts receivable and collections activity to ensure your customers pay their outstanding invoices. This gives you the time, space, and peace of mind to focus on operating your business.
WHAT CAN THE FUNDS BE USED FOR?
This injection of working capital can be used for any operational or growth needs – such as recruitment and staffing, stock purchases, or business investment and expansion.
ARE ALL OUTSTANDING INVOICES SUBMITTED?
No, you do not need to submit all of your invoices. Debt Factoring arrangements can be tailored to suit your needs, and you have control over which outstanding invoices are submitted for financing.
WHICH INVOICES CAN BE SUBMITTED?
Our range of Debt Factoring solutions includes a facility called Selective Invoice Finance. This option allows your business to choose which invoices to submit and how long you want to access the facility. You can always submit more invoices when experiencing a cash flow shortage and need a working capital boost.
HOW LONG DOES IT TAKE TO RECEIVE FUNDING?
Once your finance facility is approved and in place, you can receive cash advances in as little as 24 hours after submitting your outstanding invoices.
WHAT IS THE COST OF DEBT FACTORING?
Debt Factoring costs can vary depending on your business, your customers, and the services you choose to use. For over 35 years, ScotPac has helped SMEs across Australia access the funds they need at market-leading rates. For a personalised quote, reach out to our team today.
WILL MY CUSTOMERS KNOW ABOUT MY DEBT FACTORING FACILITY?
Yes. Customers will be aware of your partnership with ScotPac, as our team will manage your accounts receivable and collect payments on your behalf as a third party. While this compromises confidentiality, it allows you to focus on running and growing your business to support long-term success and profitability.
If you would prefer a confidential Invoice Finance arrangement, Invoice Discounting leaves debt collection in your business’s hands. Find out more about Invoice Discounting here.
WHAT HAPPENS IF CUSTOMERS DO NOT PAY?
Our debt collection specialists work hard to help minimise this risk. We conduct credit checks on your customers before approving your application to ensure you’re not overexposed. If this is a concern, we recommend considering Bad Debt Protection as part of your credit facility to safeguard your working capital and protect your business.
WHAT DO I NEED TO APPLY FOR DEBT FACTORING?
We recommend getting in touch with our lending specialists to determine the best financial solution for your business and to outline the specific documentation and information you’ll need to provide.
CAN I USE DEBT FACTORING IF I HAVE BAD CREDIT?
Yes, Debt Factoring may be a good option for small to medium businesses with limited or poor credit. Because the application process focuses primarily on your customers’ creditworthiness, it is less dependent on your own credit score – making it more accessible than traditional bank loans.
If this is a concern, we recommend speaking with one of ScotPac’s lending specialists today.