small business division

For the first half of the FY14, FSA reported a profit after tax of $5.8M. Approximately 20% of this profit came from their small business division which offers factoring finance through its subsidiary, 180 Group.

For anybody that has read any of my previous posts in regards to FSA, you would be aware that I like to bang on about the growth in debt agreements. I am going to start reporting on the growth in factoring finance.

To give you a bit of an idea as to the turnaround in the small business division, I have listed the contribution this division has made.

$1.2M Profit first half 13/14
$0.9M Profit second half 12/13
$0.1M Loss first half 12/13
$0.1M Loss second half 11/12
$0.6M Loss first half 11/12

For CY13, profit was $2.1M compared to a loss of $0.2M in CY12. This is a $2.3M turnaround in one year.

180 Group have been recruiting more sales staff as the Melbourne office was recently launched. Expect this division to continue to grow.

19 May 2014
​New figures released by the Debtor and Invoice Finance Association of Australia and New Zealand (DIFA) show that debtor finance turnover totalled 15.0 billion in the March 2014 quarter, representing a 3.1% increase on the corresponding quarter last year.
In the 12 months to the end of March 2014, debtor finance (Factoring and Discounting) provided to Australian businesses totalled $63.7 billion.
Following a decline in total debtor finance turnover brought about by the global financial crisis, the industry has continued its growth since a turnaround in 2010. These latest figures mark the fourth consecutive year the industry has witnessed growth in the 12 months to the end of March, despite the departure of two major providers during that time.
Over the four-year period, Factoring turnover has witnessed a significant increase of more than 60% (from 798.8 million in March 2010 to 1.284 billion in March 2014), and this has been fuelled by the rise of the non-bank financiers.
Aside from Tasmania, the rolling 12-month Factoring turnover increased in all states over the four years, with the biggest increase in usage occurring in New South Wales.
DIFA Chairman, Mr Lee Clarke, said the continuing growth of Factoring turnover highlights the extent to which SMEs are becoming aware of how they can leverage their unpaid invoices to provide working capital for their business.
“While debtor finance is at times viewed as a tool to merely overcome short-term cash flow constraints, a growing number of Australian businesses are engaging it more strategically to grow their business.
“The enhanced cash position of a company can be used to employ more staff, for capital expenditure, or to take advantage of acquisition opportunities.
“Whether through a Discounting or Factoring arrangement, debtor finance is ideal for many SMEs because it is a very flexible form of finance, and it easily responds to the fluctuations of a company’s business activity.
“Perhaps the most appealing feature of debtor finance is that it doesn’t generally require a business owner to commit their personal assets as security.
“A growing number of Australian businesses are taking advantage of the benefits afforded through a debtor finance arrangement and we expect this trend to continue into the future,” Lee said.
While debtor finance affords many advantages, according to DIFA research, Australian businesses recognise the three key benefits of debtor finance to be;
Freeing of cash within 48 hours (usually varying between 75-90% of the value of an invoice), allowing the business to accelerate growth;
The ability to utilise the improved cash flow position to obtain early settlement discounts from suppliers/creditors (up to 5%);
A reduction in management time spent on chasing slow payers (through a factoring arrangement), allowing managers of the business to concentrate on areas more appropriate to their responsibilities, such as driving new business.
The biggest users of debtor finance in the March 2014 quarter were the wholesale sector at 34% of total receivables followed by manufacturing at 21%.