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  • Sydney 02 9299 8477
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  • Adelaide 08 8239 0555
  • Perth 08 9474 1677

What you need to know about cash flow

  • Why businesses are vulnerable
  • What can happen when you're not protected?

Unpredictable cash flow is one of the most commonly cited reasons for business failure. As most SMEs know, there is no telling when or how your cash flow could be interrupted. Here are a few examples of forces outside your control that negatively affect cash flow:

  • Customers not paying on time, or at all.
  • Suppliers who want their invoices paid COD or within seven days. If your terms with your clients are four weeks, that constitutes a significant financial gap which you have to cover.
  • A major customer goes broke and you’re left with a huge hole in your income.
  • Customers negotiating an extension of their terms of trade.

And here’s what can happen when cash flow issues overtake you:

  • Your business growth is impacted. After all, how can you plan a long-term strategy when you can’t predict your income?
  • You end up spending so much time managing cash flow issues that don’t have time for the rest of your business demands.
  • If you’re not getting paid, your creditors might have to wait, and that adversely affects your relationship with them.
  • You don’t have the working capital to update your equipment. As a consequence, the quality of output suffers and, possibly, your hard-won industry reputation.

For all of these reasons, a strong finance facility is one of the smartest moves you can make to future-proof your business against cash flow interruptions.

We have local offices in every state and we’re here to help. If you’d like to know more about our trade and debtor finance solutions, get in touch today.


  • Confidential Invoice Discounting
  • Partnership Debtor Finance
  • Full Service Debtor Finance
  • Selective Debtor Finance

Confidential Invoice Discounting: You maintain complete control over your debtors’ ledger. Your customers will not know about your arrangement with us.

Partnership Debtor Finance: You collect your customer invoices for an agreed period. If your invoices are still unpaid after that time, we take over for you. Your customers will know about your arrangement with us.

Full Service Debtor Finance: You are given a line of credit, secured against your accounts receivable. You simply invoice your customer, and supply us with the invoice at the same time. We pay you a percentage of the invoice amount, minus our fees. When the customer pays the invoice, you receive the remaining 20%. Our arrangement is disclosed to your customers.

Selective Debtor Finance: You have the ability to choose one or more debtors to fund with us. This can either be on a confidential or disclosed basis with your customers.


Case Study 1 – The Merger

Company A is in the Manufacturing sector. Company B is in the Distribution sector.

The problem:

Company A encounters a scenario where Company B is willing to merge operations and provide Company A with a distribution outlet and new distribution channels that will open up new markets. In all likelihood, this will boost Gross Profits by around 47%. Capital required for the merger is $450,000. The problem is that Company A doesn’t have that sort of cash available and is unable to raise sufficient finance through conventional business banking channels. Company A’s finance broker happens to hear about their dilemma and, upon closer inspection, it is revealed that Company A has $675,000 in debtors. A single good quality debtor makes up 50% of the Debtors Ledger. Company A’s finance broker approaches Thorn Trade & Debtor Finance with a Debtor Finance application knowing that high debtor concentrations can be accepted.


Thorn Trade & Debtor Finance approves a Debtor Finance facility within 14 days from time of application. With an 80% advance rate of the debtors’ ledger, Company A has enough funding available, to complete the merger and have some additional cash flow for working capital. The merger has now provided them with a huge growth opportunity that sees them realise 30% growth in the first year after merger and well on track to achieve the 47% predicted growth.

Case Study 2 – Refinancing the business

A long-haul transport company with significant assets, including a substantial fleet of refrigerated and conventional trailers, warehouses in two states and their own commercial premises in Brisbane. They have their bank facilities; including loans over the commercial property, equipment leases and overdraft facilities, with two separate banking institutions.

The problem:

One of their banks has recently raised interest rates, by a significant margin, which will mean substantial additional interest payments per annum and unpalatable cost of borrowings. The company explores its options with regard to refinancing their facilities to a single bank or into another bank. After discussing the matter with their finance broker, they realise that the $87,000 tax bill they have recently run up with the ATO, although under payment arrangement, will prevent them from being able to refinance. To compound their woes, their commercial premises near the Brisbane River have recently lost $120,000 upon re-valuation, pushing their LVRs for refinance up to 83%. They believe their chances of refinance are extremely limited. Their finance broker identifies that they have $900K in debtors.

The outcome:

The broker approaches Thorn Trade & Debtor Finance with an application for debtor finance, and the facility is approved at $720,000. The company immediately pays out their tax debt and contributes a further $160,000 from the Debtor Finance towards the refinance through a new bank. The facility enables them to refinance and they save significant dollars in interest payments as a result.

Case Study 3 – Loss of Business through a Bad Debt

A recruitment company specialising in mining related recruitment.

The problem:

Although having traded for 2½ years, the recruitment company has a single client that forms 48% of their business. That client experiences financial difficulties and ends up closing its doors, meaning the recruitment company experiences a significant loss in income.

With upcoming wages and other commitments, the Directors are at a loss as to how they will meet those commitments, given this sudden loss of income and cash-flow crunch. Their accountant suggests they consider a Debtor Finance facility.

On approaching Thorn Trade & Debtor Finance, they are approved for an $180,000 facility with no lock-in contract or terms. They draw down on the facility immediately after settlement. This enables them to meet their commitments to creditors, the ATO, and their bank. After a year they find that, with new business they have secured and their existing client base, they no longer need a Debtor Finance facility. They kindly advise Thorn Trade & Debtor Finance that they no longer need the facility. Upon advice that there are no exit fees or any other fees associated with keeping the facility available should they need it in future, the company decides to keep the facility in place.

If any of these case studies sounds like you, please get in touch to talk through your options and find the solution you need.

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