Debtor Finance which is also referred to as invoice finance is gaining popularity in the business environment. Start-ups and small business organisations opt for debtor finance as it is relatively easier to qualify for eligibility, more flexible and does not demand any collateral other than the accounts receivable ledger of the organisation.
Read on to find out some popular myths about debtor finance.
Myth 1: Debtor Finance Can Tarnish Relationships with Customers
With thousands of businesses availing this mode of finance, it is highly unlikely for customers to assume that a business using debtor finance is in trouble. Additionally, organisations offering this service can ensure confidentiality if requested by their customers.
Myth 2: Debtor Finance Is For the Struggling Start-Ups Only
Debtor finance is being rapidly recognised as a standard alternative for long term funding by the small as well as medium-sized enterprises across the globe. Business owners use this lucrative option to avoid circumstances where they need to pledge their home or other personal properties as collateral. In the business world, debtor finance is a great way to meet the working capital needs of any business.
Myth 3: Debtor Finance May Be Expensive
While debtor finance may be slightly more expensive than availing loans against personal properties, it is important for organisations to recognise the significance of acquiring such quick money. Debtor finance will pay for itself and helps the business to grow rapidly. In the long term, it proves to be a better and more valuable option for utilising newer opportunities.