The growing number of Western Australian small to medium enterprises (SMEs) accessing cash to fund growth has led to the state recording the fastest growth in debtor financing in the country, according to the latest quarterly Debtor Finance Index.
The amount of debtor finance accessed by WA SMEs has increased by almost 450 per cent during the past five years, from $277 million in the June 2002 quarter to $1.26 billion in the June 2007 quarter, the quickest growth across all states.
The figures, released by the Institute for Factors and Discounters, show the growing popularity among WA SMEs for using outstanding debts to fund business growth.
More than 5,600 Australian businesses used debtor finance to fund their growth, about 720 more than last year.
WA businesses account for roughly 10 per cent of the total turnover in the index, up from 7 per cent in the June 2002 quarter.
Wholesale trade and manu-facturing industries are the sectors to most frequently utilise debtor finance, according to the Index.
The total value of factoring and invoice discounting has experienced a 10-fold increase in 10 years, reaching $50 billion last financial year.
Over this period, debtor finance has undergone a transformation, evolving from a niche product generally provided by specialist non-bank providers to now being a mainstream funding alternative provided by a number of banks.
“The very strong growth of debtor finance is anticipated to be maintained in the period ahead,” the report says.
