- What is it?
- How does it work?
- What are the benefits to the professional practice client and their customers?
- Who is the ideal client?
- What do you have to do?
- What else do I need to know?
1) What is it?
Professional Fee Funding is a billing system that professional businesses can use to receive prompt payments from their customers. Any professional service provider who charges fees to their customers and wants to be paid immediately and stop chasing up slow payers will be interested in this system. The system has been based on the popular and widely accepted Insurance Premium Funding product.
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2) How does it work?
The way the system works is that the professional practice will be set-up with a billing software system on their computer. The business will then input all their invoices directly through this system in their office. When the professional practice charges a fee to their customers, instead of the customer having to pay the entire fee in one single payment, their customer pays the fee over 10 monthly installments plus an 8.80% flat interest rate (subject to change without notification). The professional practice gets paid 100% of their fee within 15 days of acceptance by the financier.
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3) What are the benefits to the professional practice client and their customers?
Benefits to Professional's Business
- Improves your cash flow (your full fee paid to you within 15 days of approval by the financier).
- Assists with credit control.
- Allow you to promote a 'value added' facility to your clients.
- Deal with a publicly listed, independent company.
- Don't force your clients to pay up-front when your competitors don't.
- Another reason for your clients to deal with you and not your competition.
Benefits to Your Customers
- Facility is simple and cost effective.
- Fee payment is spread over 10 monthly payments enhancing cash flow.
- No 'Bricks & Mortar security' or Directors/Personal guarantees required. YT
- WWAS
- A line of credit is created that doesn't affect existing banking arrangements.
- Allows for existing working capital to remain in their business to generate increased profits.
- Interest charges are tax deductible.
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4) Who is the ideal client?
Professional Fee Funding is commonly used by accounting practices, lawyers, recruitment firms, management consulting firms, advertising agencies and basically any firm that provides services rather than products. For product related companies please refer to Business Cash Flow Funding. This product is available to commercial applicants only i.e. the client must have an ABN number.
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5) What do you have to do?
To gain access to the system, the professional practice has to complete an accreditation form and provide an up-to-date Profit & Loss and Balance Sheet.
Loans Australia will then set you up with the Professional Fee Funding invoicing software and show you how it works. Loans Australia will continue to support the practice with regular follow up service calls to make sure the system is being fully utilised.
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6) What else do I need to know?
The minimum fee size that can be funded is $500. The service is only for billing clients who have an ABN. This form of lending is unregulated only. If a client stops paying, the shortfall must be refunded. If a client won't pay over ten months, it is unlikely they would have paid the full upfront fee in the first place.
In most cases the professional practice is automatically approved and the financier does not assess the individual loans.
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