Factoring has been in the news lately, winning accolades from respected business commentators.

Phil Ruthven, chairman of IBIS Business Information, described factoring finance as one of “the new rules” of successful modern businesses.

Quoted in Business Review Weekly, Phil Ruthven said the cost of factoring was about the
 same as the overdraft rate – currently about 9%.

“People say to me:
“That’s a bit high because bill finance is nearer 6%’. The answer is that 9% is hardly expensive when companies should be making nearer to 20% with their own capital,” said Ruthven.

Meanwhile, prominent accountant, Curt Rendall, had the following advice for companies experiencing cashflow problems:
“The answer to your prayers may well be factoring.”.

“Factoring is not much more expensive than a bank overdraft, yet it gives its user the freedom to fund growth beyond the painful bricks and mortar threshold”, wrote Rendall in the accounting magazine, Charter.

Lamenting the banking sector’s poor performance on SME finance, Rendall described factoring as a financial product which has “come of age”.

Curt Rendall is certainly well-placed to be commenting on small business finance; he’s chairman of the Institute of Chartered Accountant’s national SME committee and deputy chairman of the Small Business Development Corporation of NSW.