In order to raise funds for your business, you are required to consider a lot of funding options that are available in the market. Debtor finance is a type of business funding options and you must consider its pros and cons before availing the option. It is a concept wherein the agency keeps all your trade receivables as security in exchange of cash.
When is debtor finance best?
Debtor finance is relatively good when the businesses have long period of cash conversion. Usually, a business has to pay all the bills within a period of 21 days or more. 45 days are provided to the customers to settle their terms. Thus, during the expansion period, business will absorb more cash than its availability. This is known to be the best option against other options, in which you can easily continue with your next project.
Though most of the people do not prefer this option, it comes as a relief when other options do not work in your favor.