Frequently asked questions
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No. You can keep your current banking arrangements in place. The only change will be the banking details you provide on the bottom of your invoices you send out to your customers. These details will be a ABL bank account to which your customers will pay into.They will not be aware that it is a ABL bank account.
No. ABL will be only providing bookkeeping services as a condition of the funding facility. Your current accountant can still look after all your taxation returns.
No. ABL registers an ALL PAAP over the business on the Personal Property Securities Register (PPSR). Prior to the PPSR this type of security was known as a Fixed and Floating Charge. Essentially, we take a mortgage over your business NOT your personal property.
There are several important differences:
- Traditional term loans provide one lump sum of cash when the loan is issued, and the rest of the loan term is spent paying off the principal and interest. With asset based loans, different amounts of money can be regularly borrowed and paid back repeatedly over the life of the loan arrangement.
- Term loans usually have a set amount that must be paid back each month, for a set number of months. With an asset based loan, the payments can vary depending on how much money the business collects from sales or receivable payments.
- In setting up a traditional loan, the bank looks primarily at cash flow and credit ratings to determine whether a business qualifies for a loan, or how much money they can borrow. With an asset based loan, ABL looks primarily at the value of the business’s assets, and factors such as credit scores are not weighted as heavily.
There are two primary differences between asset based loans and factoring.
- Factoring deals only with receivables, while asset based loans can be based on both receivables and physical assets.
- Factoring involves the transfer of ownership. Your invoices are sold to the factoring company, which then owns the receivables and collects the money from your customers. With a loan, you retain ownership of the receivables and any other assets that are used as collateral.
- Initial upfront fee of $1,500 to conduct the initial review,
- Legal costs for loan document preparation of generally $1,500 – $2,500 depending on the business structure, and
- Independent valuation fees on business assets which is dependent on the location and number of items to be valued.
| Asset | Balance Sheet | Eligible Amount | Advance Rate | Maximum Advance |
|---|---|---|---|---|
| Accounts Receivable (Debtors) | $ 100,000 | $ 80,000 | 85% | $ 68,000 |
| Inventory | $ 50,000 | $ 40,000 | 50% | $ 20,000 |
| Plant & Equipment (Equity) | $ 100,000 | $ 80,000 | 60% | $ 48,000 |
| TOTAL LIMIT | $ 200,000 | $ 136,000 | ||
The following table is a guide for the Line of Credit. The management fee %, calculated on your sales, includes all financial recording and reports, line of credit funding and IT support costs.
For additional short-term advances, that may be required from time to time based on inventory and fixed asset LVR’s, interest is calculated at 1.5% per month of the outstanding advance balance and applied to the RLOC. Principal reductions for advances are made from deductions from the monthly retention balance from the Line of Credit.
| ANNUAL TURNOVER | $0 to $1,000,000 | $1,000,001 to $1,500,000 | $1,500,001 to $2,500,000 | $2,500,001 to $3,500,000 | $3,500,001 to $5,000,000 |
| FACILITY FEE (Excl GST) | 7.00% | 6.00% | 5.00% | 4.50% | 4.00% |
Usually, it takes 5-10 business days between the day that you apply for your asset based loan and the time that the first funds are issued. Once the loan arrangement is established, further cash advances can be funded on your invoicing days.
Yes. An asset based loan arrangement is, in many ways, a partnership; both the business and ABL will benefit most if the loan is structured in away that gives you the best chance of success with the lowest risk. Treat your loan as a partnership, and work with ABL to find the best mutually beneficial solution.
A bank account (called a segmented account) is set up to receive the payment of your customer invoices. Any amount that is paid off frees up room within the credit limit, allowing you to borrow more money if needed. This way, you have a great deal of control over exactly how much you have borrowed and how quickly it is paid off.
Because asset based loans are so customizable, it is difficult to specify the exact minimum conditions that would be required to qualify for a loan. However, in saying that, an absolute minimum your business will need, is to trade on a business-to-business basis offering terms to your customers -i.e., it must have a debtors or accounts receivable balance.
Yes. ABL Advisors’s systems utilise a secure server service accessed via Azure which offers robust, enterprise-level security which ensures that at all times your business information is protected. If you’d like more information you can find a link to our Privacy Policy document at the bottom of any page in our site or call us.
No. Our services range from small business turning over $500k to business with turnover of $100m. Our outsource services are most effective for small to medium enterprise, however, there is nothing stopping us working with the inhouse finance function of larger business. We enjoy assisting with one off projects, funding, corporate governance, strategic planning, operational reviews and the list goes on. Just ask and we will find a solution.
Yes! Our data centres are based in Australia with full redundancy and 99.9% uptime.
Our people are our people – after 20 years of working together our dedicated team in Australia and India all work to the same beat. A culture of respect and accountability is how we work together, and it seems to work. The team are encouraged to take up self-development and education programmes to assist them and allows us to develop the very best people. We believe that customer success with strong leadership, which creates a great culture, which ensures high output, quality and professionalism. Salaries are paid at very competitive rates, which is important so that we attract the very best talent.
We operate from 8:30am to 9:30pm all days except public holidays.
Our team in Australia are always available if you need to discuss anything. A dedicated Management Accountant based in India will be your main point of contact for day-to-day interactions. They are an extension of your of your business, just a few thousand miles away. Once the business has been onboarded and best practice is implemented there is very little to do, and the business processes and software will work their magic.
The team in India are required to have an CPA or CA qualification. Previous commercial experience and employer history is an important consideration. The team in Australia also have CPA or CA qualification and a high level of commercial experience is a necessity to be able to join the team.
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