The Debtor and Invoice Finance Association (DIFA) formed in 1994 to represent the major providers of the fast growing debtor finance market.

The Association exists to:

** Represent the industry participants, which include major banks, regional banks and independent providers
** Promote the importance of the industry to small and medium-sized enterprises
** Promote debtor finance to potential users, trade associations, professional bodies and government

DIFA does not involve itself in matters relating to the commercial activities of its members, or the terms and conditions on which individual members conduct business with their clients.

Note: In March 2013, the Association changed its name from the Institute for Factors and Discounters of Australia and New Zealand (IFD) to DIFA to better reflect the changing market and the enhanced sophistication of its members’ offering.

How it works

Factoring and Discounting are two options for businesses to improve their cash flow by accelerating the cash cycle.

Under a Factoring arrangement the provider additionally manages its client’s sales ledger and collection of accounts. Therefore, under a Factoring arrangement the debtor is aware of the arrangement and makes payments directly to the provider.

Under Discounting, which is an undisclosed facility, the debtor is unaware of the arrangement and makes payments to the client, as per usual, but as the debt is owned by the provider, the client manages the collection process and then passes the revenue collected to the provider.

Generally, a Discounting arrangement would be utilised by larger businesses as they have in place the in-house resources to manage receivables collections and the reporting requirements of a provider. Conversely, smaller organisations often prefer a Factoring arrangement as they are alleviated of the responsibility of managing receivables collections, allowing management to concentrate on other business functions.

One of the attractions of both Discounting and Factoring is that they are self-liquidating facilities, meaning that a business isn’t taking on additional debt per se, but rather accessing money that is already owed to it. The goods or services have already been provided, and while the facility needs to be repaid, this should take care of itself as a matter of course as the company’s debtors settle their invoices over time.


According to research undertaken by the DIFA, Australian businesses recognised the three key benefits of debtor finance to be;

1. The freeing of cash within 48 hours (usually varying between 75-90% of the value of an invoice), allowing the business to accelerate growth;

2. The ability to utilise the improved cash flow position to obtain early settlement discounts from suppliers/creditors (up to 5%)

3. 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.