Invoice Discounting (ID -also known variously as Debtor Finance or Factoring) involves borrowing money against the value of your debtor book rather than the usual property security.

Several of the major Banks have moved away from this type of funding over recent years as it is not considered to be mainstream.

Both Westpac and NAB continue to offer Invoice Discounting as a core product and do so extremely well.

Their target business is usually one with a very sizeable turnover and a healthy spread of debtors.

There are also specialists in this field who are happy to assist a growing business who may not fit either Westpac or NAB's lending criteria. 

Aston Mortgage and Finance has access to an extensive range of Invoice Discounting funders to suit your business's needs.

How it works >

A financier will generally advance you up to 85% of the value of each qualifying debtor and charge a fee/interest for doing so. Once the debtor has paid the invoice in full the remaining 15% is advanced.

There are several ways of operating an Invoice Discounting Facility. In all cases, you will retain the relationship with your customer from a sales perspective but unless your ID is a 'confidential' facility, your customers will be required to pay into the ID provider's bank account and may receive phone calls from the ID provider directly. A 'confidential' provider will ensure that the bank account is still in your name and that their presence is not known to the customer.

Invoice Discounting is an excellent method for speeding up the cash flow of a business. Funds will be received within a couple of days of invoicing a client rather than the 30 or 60 day terms typical for businesses. This can effectively eliminate any need to offer discounts for early payment of invoices whilst also allowing you to take advantage of discounts offered by their suppliers for early settlement of accounts.

The most traditional form of working capital finance is through a Bank Overdraft facility. Essentially this is a business bank account that can be used for day to day transactions and can be drawn upon to a predetermined limit. 

Overdrafts are designed to accommodate the maximum cash requirement of the business’s cash flow cycle and the limit should be set to allow the account to fluctuate fully.

If your overdraft balance seems to always remain near its limit, you should consider refinancing the 'core debt' (the amount the balance never returns below) onto a term loan facility. This would enable you to re-gain that flexibility that every business needs.

Aston Mortgage will work with your Accountant to determine your working capital needs and demonstrate your limit requirements to the Bank. 

Aston Mortgage staff have been assisting importers and exporters for many years in managing the cash-flow in their business through the provision of Trade Finance facilities.

More and more Australian businesses now deal with Asia (China and India particularly) for supply of goods, manufacture of components and a variety of other reasons. Often the same businesses then export the completed goods to European or US markets.

We can establish the following types of Trade Finance facilities for your business:

• Trade Finance Loan- Exporters can fund their manufacture cost obligations etc specific to an underlying trade transaction (sale) that must be evidenced by the appropriate documentation. Goods are then delivered/shipped to the purchasing importer and the Trade Finance Loan is repaid once payment is received from the importer. Alternatively, an importer may seek a Trade Loan to assist with the payment for goods they are importing pending arrival and sale of the goods to their local buyers.
• Documentary Letter of Credit- a bank guarantee provided by the importer’s bank to the exporter guaranteeing payment for the shipped goods upon presentation of shipping documents (and meeting any required conditions) or at a future specified date. This payment arrangement shares the risk between the exporter and importer and is often used when they are still establishing a trade relationship. For the importer, there is some assurance that the goods are shipped prior to payment being made, and for the exporter, they are guaranteed payment provided they ship the goods and meet any agreed conditions.

Managing risk in your business is important to us at Aston and we have access to the Major Bank capital markets sections who can assist you to protect against commodity price and foreign exchange movements.

Vehicle and Equipment Finance, also known as Asset Finance is used for the purpose of purchasing vehicles, equipment and other non-property assets.

Aston Mortgage & Finance can assist you in obtaining funding for assets such as >

• Motor Vehicles (fleet cars, utilities)
• Transport Equipment (trucks, trailers, tankers etc)
• Yellow Goods (earthmovers etc)
• Farm Equipment
• Ships, Airplanes, Trains and Buses
• Other assets (office furniture, IT systems and medical equipment)

Within Vehicle and Equipment Finance, there are various facilities on offer such as Chattel Mortgage (Equipment Loan), Hire Purchase Agreement (Offer to Hire or Lease Purchase), Finance Lease, Operating Lease and Novated Lease (a business leasing a vehicle on behalf of their employee with repayments made out of the employees pre-tax income). Each of these facilities have different accounting, tax and residual value implications associated with them. We suggest that clients consult their accountant to determine which type of facility is most appropriate for their particular circumstances.

Purchasing an asset using cash can be restrictive on a business' ability to grow or even continue to trade effectively on a day to day basis. Correctly structuring an asset purchase can assist to spread the cost over the life of the asset, leaving vital cash for your working capital needs. Whether purchasing a new asset or looking to release equity from an existing asset, where a sale & leaseback may be available (age restrictions apply to various assets in this regard), Aston Mortgage & Finance are the structuring experts.

Asset Finance is generally a fixed interest rate loan structured over the useful life of the asset. You may choose to have a balloon or residual payment (a lump sum payable at the end of finance term) to be cleared upon sale of the asset in order to reduce your monthly commitment. Vehicle and Equipment Finance is secured by the asset it is funding and repayments can be structured monthly, quarterly, semi-annually and annually depending upon cashflow. We have extensive experience in structuring these transactions as well as access to numerous financiers who specialise in this area.