The latest industry statistics show high wage costs, a strong dollar and interest rate pressures are causing Australian businesses to turn to debtor finance to ease cashflow problems.
Figures released by the Institute of Factors and Discounters (IFD) show total debtor finance turnover in the December 2011 quarter was $16.3 billion, an increased of four percent compared to the previous September 2011 quarter.
Debtor finance turnover for the 12 months to December 2011 was $61.4 billion, up 4.6 percent from the 12 months ending December 2010.
On the other hand, recent Reserve Bank figures show that business credit rates are rising more slowly with an increase of 1.4 percent in the year leading up to January 2011.
Rob Lamers, head of debtor finance at Oxford Funding said: “Economic pressure from the continued strength of the Australian dollar, high wage costs and interest rates are putting strain on the cash flow of many businesses.”
“Additionally, property assets are not increasing as much as they have historically, so alternatives such as debtor finance, which is not secured by property but by a business’s assets, become more viable,” said Lamers.
The IFD statistics also reveal that total factoring finance increased 42.3 percent in the December 2011 quarter compared to the same quarter in 2010.
Factoring finance was most popular in New South Wales and ACT, accounting for 38 percent of total turnover, followed by Victoria (28 percent), Queensland (15 percent), Western Australia (11 percent), South Australia and the Northern Territory (8 percent each) and Tasmania (0.2 percent).