Debtor Finance

Debtor finance is a form of business funding that allows eligible businesses to access cash tied up in unpaid customer invoices. Instead of waiting for customers to pay on 30, 60 or 90-day terms, you can access a percentage of eligible receivables earlier and use the funds as working capital.

Your eligible accounts receivable ledger is used to support a revolving finance facility. As your business issues invoices to approved customers, you can access an agreed percentage of their value before payment is received. When customers pay their invoices, the amount advanced and applicable interest or fees are accounted for and your available facility adjusts accordingly.

The terms are often used interchangeably. Both generally involve accessing working capital against unpaid customer invoices. The exact structure can differ between facilities, including how invoices are funded, how customer payments are handled and whether your business or the finance provider manages collections.

The amount available depends on the value and quality of your eligible receivables, customer base, payment terms, turnover and lender criteria. Rather than being based solely on a fixed loan amount, your available funding can increase as your eligible sales and debtor ledger grow.

Your facility limit generally depends on your turnover, outstanding eligible invoices, customer concentration, payment history and overall business circumstances. Larger debtor ledgers can potentially support larger facilities, subject to lender assessment.

Straightforward applications can often be assessed quickly once the required business and debtor information has been provided. Establishing a debtor finance facility can take longer than a simple unsecured loan because the lender generally needs to review your receivables ledger and customers. Once established, however, it can provide ongoing access to working capital.

Pricing varies depending on your turnover, facility size, debtor ledger, customer quality and finance structure. Costs may include interest or funding charges on amounts advanced as well as administration, service, facility or other fees. We compare the overall cost and structure across suitable options rather than focusing only on an advertised rate.

Not necessarily. Debtor finance is primarily supported by eligible business receivables rather than residential or commercial property. Security arrangements and guarantees vary between lenders and facilities.

Debtor finance is generally suited to businesses that sell goods or services to other businesses on credit terms and regularly carry outstanding customer invoices. It can be particularly useful for growing businesses or industries where long payment terms create ongoing cash-flow gaps.

Potentially. Eligible sole traders, partnerships, companies and trusts may be able to access debtor finance. Eligibility depends on factors including your turnover, customers, invoices, debtor ledger and overall business circumstances.

Potentially. Because debtor finance is linked to eligible receivables and customer quality, some newer businesses may qualify even without a long trading history. Your invoices, customers, turnover and overall financial position will influence the available options.

Potentially. Previous credit issues don't automatically rule you out. Because the lender also considers the quality of your receivables and customers, debtor finance may sometimes be available where traditional business finance is more difficult to obtain. Your credit profile can still affect approval, pricing and facility terms.

Potentially. Requirements vary, but lenders may place significant emphasis on your debtor ledger, aged receivables, business bank transactions, accounting records and customer information. Larger or more complex facilities may require more detailed financial information.

Generally, eligible invoices need to relate to goods or services that have already been supplied to creditworthy business customers. The age of the invoice, payment terms, customer, industry and whether the invoice is disputed can all affect eligibility.

It depends. Debtor finance is generally designed around current eligible receivables rather than significantly overdue or disputed debts. Older invoices may be excluded from the borrowing base or funded differently depending on the facility.

Potentially. Some debtor finance facilities operate across most or all eligible receivables, while others provide greater flexibility over which customers or invoices are included. The right structure depends on your business and the available facility.

Not necessarily. Some facilities require eligible invoices across your debtor ledger to be included, while others may offer selective funding. We compare the available structures based on the level of flexibility your business needs.

It depends on the facility. Some arrangements can operate confidentially, while others require customers to make payments into an account nominated or controlled by the finance provider. We can take customer visibility into account when comparing your options.

That depends on the structure. Your business may continue managing collections and customer relationships, or the finance provider may take a more active role in collecting outstanding invoices.

This depends on whether the facility is recourse or non-recourse and the terms of the agreement. Under many recourse facilities, your business remains responsible for unpaid invoices. Some structures may provide protection against certain customer defaults, subject to conditions and exclusions.

With recourse debtor finance, your business generally remains responsible if a customer fails to pay an eligible invoice. With non-recourse finance, some customer default risk may be assumed or insured by the provider, subject to the facility's limits, exclusions and conditions.

A business loan generally provides an agreed amount based on your business and ability to repay. Debtor finance is linked to your eligible accounts receivable. This means the funding available can potentially increase as your sales and debtor ledger grow.

A line of credit provides an approved borrowing limit based primarily on your overall business and financial position. Debtor finance is linked more directly to eligible customer invoices, so the amount available can move with your receivables.

Both involve funding against accounts receivable. Factoring commonly includes a greater level of debtor administration or collection services from the finance provider, while some debtor finance facilities allow your business to retain greater control over collections and customer relationships.

Yes. Debtor finance is designed to shorten the gap between issuing invoices and receiving customer payments, giving your business earlier access to money tied up in receivables.

Funds can generally be used for legitimate business purposes, including wages, suppliers, inventory, tax obligations, operating expenses, equipment, new contracts and business growth.

Yes. Instead of waiting weeks or months for customers to pay, debtor finance can provide earlier access to working capital that can be used for payroll, suppliers and other operating expenses.

Yes. Because available funding can grow alongside eligible sales and receivables, debtor finance can help businesses take on larger contracts, purchase additional stock, hire employees or expand without waiting for existing invoices to be paid.

Yes. Businesses with seasonal sales or fluctuating payment cycles may use debtor finance to access cash from eligible invoices earlier and manage expenses between periods of stronger revenue.

Debtor finance is generally designed as an ongoing working capital facility rather than a one-off loan. You can continue accessing funding against eligible receivables while the facility remains in place, subject to its approved limit and terms.

Requirements vary, but you may be asked for an aged debtor report, customer information, invoices, accounting records, business bank statements, financial statements, ABN or company details and information about your trading history.

Getting an initial quote with Overdrive does not require an upfront credit check. We can assess your debtor ledger and compare suitable options before progressing to a formal application. If you choose to proceed, the selected lender may conduct credit enquiries as part of its assessment.

Debtor finance can be particularly useful if your business sells to other businesses on credit terms and regularly has substantial cash tied up in unpaid invoices. It may be less suitable if most of your customers pay immediately or if you primarily sell directly to consumers. We compare debtor finance with invoice finance, lines of credit and other working capital options to find a structure suited to your business.