More Smes Turn To Debtor Financing To Solve Cash Flow Woes

More SMEs Turn to Debtor Financing to Solve Cash Flow Woes: New
IFD Figures Reveal

- Total debtor finance industry worth a staggering $65 billion -
- Wholesale trade sector driving growth -

Melbourne, 6 September 2009 - Australian wholesalers are leading the charge of companies turning to debtor finance to ease the cash flow crunch. The tough economic conditions plus an increasing rate of businesses defaulting on payment terms is fueling a rise in the number of debts sold to banks and financial institutions.

Total debtor finance turnover for the June quarter 2009 reached $15.6 billion, up on March quarter's figures of $14.9 million, according to the latest data from the Institute for Factors and Discounters. The top three industries using debtor finance are: Wholesale Trade (39%), Manufacturing (21%), Property and Business Services (9%).

State turnover was still heavily skewed to the eastern states, with NSW/ACT accounting for 34%, Victoria 33%, Queensland 16%, SA and NT 9%, WA 8% and Tasmania 0.1%.

Invoice Discounting, a facility whereby the company maintains the accounting and collections process in house, still represents the most popular and fastest growing form of debtor financing in Australia, recording a June turnover of $14.8 billion. Factoring turnover for June represented $747 million, however this service which involves the financier managing the accounting and collections process on behalf of the client, has shown progressive growth over the past 12 months as more businesses seek assistance with the collections process.

Over the past 3 years turnover in the debtor finance Industry has increased by 58%, from $41 million in 05/06 to $65 million in 08/09.

Commenting on the latest figures, Rob Lamers, CEO of debtor finance firm, Oxford Funding (a subsidiary of Bendigo Bank) said the industry could surpass $100 billion per annum within three years, as businesses look to debtor finance to support their cash flow requirements.

"Many small businesses were ill prepared for the economic slowdown, and as a result were caught out when defaulting debtors and drawn out payment terms put the squeeze on cash flow prompting many to look to other financing methods, such as debtor finance, to support their cash flow requirements," Lamers said.

Lamers cautions that more cash flow pain is likely for many businesses with the National Credit Insurance (Brokers) P/L (NCI) revealing another record month of claims against bad debtors, with claims made in July up 114% on the corresponding month last year, fueling overall demand for debtor finance.

"Almost 6,000 businesses are now using a debtor finance facility. These businesses are successful and they're taking the attitude that money in the bank is better than receivables on the books," said Lamers.


About Oxford Funding
Oxford Funding, a wholly owned subsidiary of Bendigo Bank (ASX: BEN), is a specialist provider of debtor finance or cash flow solutions to small and medium enterprises. Since its inception in 1994, the company has continued to remain at the forefront of the Australian debtor finance industry due to its flexibility, innovative product portfolio and commitment to best practice service delivery. Oxford is a member of Factors Chain International (FCI). www.oxfordfunding.com.au


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SOURCE: Oxford Funding