• New Wave Accountants

How Debtor Financing Can Help Attain Unhampered Growth

Growth: For any small business in Australia that seeks to stand out and set itself apart from other competing firms, this valuable factor is a coveted one that must always be sought after.

Whether you’re a capital firm with hopes of growing into a large-scale entity or a retail establishment getting your feet wet, nothing says you’re on the right track more than growth results. However, the problem with this resource is that it can prove to be a double-edged sword that can end up putting all your firm's efforts in turmoil.

One of the most prevalent reasons that businesses run out of cash and end up going broke is that they grow much faster than their teams can control. It may sound quite unbelievable at first (or even outrageous), but having a business that grows too quickly and becomes too successful for its good is a problem!

Why too much growth can harm your business

Much like money or resources, growth presents itself as something that must be approached with lots of responsibility since it’s easy to bite off more than you can chew.

The point about having a growing business is that it ends up demanding even more out of those who run it in terms of airtight processes, management capabilities, and workforce. By growing too fast with too little in place, climbing the ranks and taking on more demand will inadvertently put your company at risk of falling off!

A solution that can help

While there may be many factors that one can pinpoint why too much growth will lead to demise, the main factor to watch out for is financing.

For most businesses, the largest “creditor” of their operations is the Australian Taxation Office. This ends up happening because of unpaid PAYG withholdings, GST, or employee super because they have no other available creditors, leading them to use the ATO as a banker since they lack access to alternative funders.

At this rate, you may be wondering about how you can circumvent the problem and ensure that you have adequate funding for stable growth. Seeing that the two most predominant sources of funding are the bank or its owners, it’s easy to see that going for either can easily make for an impractical experience.

It may seem like the only solution to growth without going off the rails is being humble enough to take on more than you can handle. However, most small Australian business owners don’t realise that there’s another way to fund their growth without much compromise or high risks: Debtor financing.

How does it work?

Although many traditional firms consider it as a last-ditch solution for continued and adequate funding, debtor financing yields many crucial opportunities that will easily reward those who take full advantage of it.

Through a debtor finance company, profitable businesses can source out cash by borrowing against the debtor book, assuming that it is of high quality. Once a request is put in, a debtor financing company will advance a percentage of the debtor book (standing at around 75 to 80 per cent) so that proper funding is attained.

But this question remains: where does the funding come from? In essence, it comes from your customers, which is why professionals regard it as a method that involves using customers to fund one’s business growth.

Before you seek debtor financing to stabilise your business’s growth, it is recommended to enlist the services of a financial professional to help ensure that everything checks out. Fortunately, the experts at New Wave Accounting can help you prepare for an application and genuinely determine if it’s best suited for your needs!


For any business, one of the most crucial resources for unhampered and risk-free growth and adapting to the demands it yields is proper financing. With debtor financing, it can help ensure that things are parallel and you come financially prepared to take on all the next challenges of the growth process so that you can smoothly move your way to the top!

If you're looking for a small business accountant in the Gold coast that can help you with your business activity statement preparation and lodging-related needs, our team of experts has got you covered. Get in touch with us today to learn more about how we can keep you on top of your financial requirements in the most effective way possible!

6 views0 comments

"We take a holistic approach toward each of our business clients. Our clients consistently experience more profit, improved cash flow, and less tax."

Sign up to receive our FREE DOWNLOAD 

"101 Strategies for Business Owners to Save Tax" 

3d cover .png