It is really important to know the type of service you are looking for from the debtor lender before you meet with them. For example, do you need them to perform the administrative side of collecting the debts or are you simply looking to get the money in advance? Will you be discounting a single, large invoice or many invoices? Is this a once off need (as in the case of a single invoice) or are you looking to use the service on an ongoing basis? How important is it to you if your customers know about you using a debtor financier? All of these factors impact on the final cost of the debtor finance. Remember that debtor finance will only work for your business if you generate a reasonable monthly turnover (usually about R200,000 per month).
Like all companies that are in the business of loaning money, debtor financiers want to minimise their risks to ensure that they get their money back. Since they lend money against an invoice or a number of invoices, your customer profiles are extremely important to them.
Smaller debtor financiers may be more flexible about the size of your debtors book, so shop around. Lenders that are prepared to consider single invoice discounting are often more open to working with small businesses.
In general, debtor financiers will expect you to provide the following documents. Remember that unless the debtor financier makes copies of your documents directly from an original, you will need to have copies of legal documents such as IDs and Certificates of Incorporation certified by a Commissioner of Oaths. This can be done at no cost at any of the larger police stations.
Documents that you will be required to provide:
Once you have gathered the information needed by the debtor financiers you are ready to meet them and compare their offerings. Ideally you want each financier to provide you with the following information so that you can select the best option for your specific needs:
Finfind provides its services free of charge to businesses seeking finance. Our primary purpose is to link SMEs with all the relevant finance providers and finance products that match their funding needs. As a matching service we are not required to be a registered finance provider as we do not loan money directly.