Businesses turn to debtor finance as banks withdraw


Queensland businesses borrowed $3.11 billion against their receivables in the last quarter of 2008, an increase of 15.6 percent over the previous corresponding period

Queensland businesses borrowed $3.11 billion against their receivables in the last quarter of 2008, an increase of 15.6 percent over the corresponding period for the previous year.

Brendan Green, Chairman of the Institute for Factors and Discounters, says the rapid growth evidenced in its latest debtor finance quarterly report has been driven by several factors, including lengthening debtors’ days, difficulty accessing credit and an increase in the number of medium and large businesses with annual turnovers of $250 million and more using this form of finance.

"Receivables finance is being applied across a variety of circumstances including funding organic business growth, lengthening debtor’s days and to fund big ticket business events such as management buyouts, partner buyouts, acquisition of competitors or complimentary businesses, refinancing parent company loans as well as funding new product and business lines," he says.

The biggest users of debtor finance in the December quarter was the wholesale trade (39 percent) and manufacturing industries (22 percent).

New South Wales businesses accounted for the largest portion of borrowings for the period with $6.1 billion, followed by Victoria ($5.8 billion), Queensland ($3.1 billion), Western Australia ($1.5 billion), South Australia and Northern Territory ($1.3 billion) and Tasmania ($3 million).

Green expects debtor finance to top the $70 billion turnover mark in 2009.

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