If you are looking for a factoring facility please contact us today on 08 or fill in our online factoring quote. It is a good opportunity to outsource the credit control to professionals but if you would prefer to do your own credit control this can usually be accommodated. Using this method, you engage an invoice finance broker who will help you find a lender. In fairness a lot of successful companies use factoring as it is an ideal way to fund growth so confidentiality is not a major issue.įactoring can allow you to do your own credit control if you prefer. This method of funding is not like other types of business finance. If you do not want your customers to know you are factoring then it can be confidential. Bad debt protection – they will protect your business against the risk of bad debts allowing you to grow with peace of mind.įactoring can be confidential or disclosed.Credit control – they will do the administration you don’t enjoy to ensure cash is collected in a timely and professional manner.Finance – the factoring company will prepay up to 90% of the value of each outstanding invoice.So to summarise factoring offers 3 main services: When your customer pays the factoring company the balance of the invoice is released to you less any factoring charges.Īdditionally many factoring companies will offer you bad debt protection which reduces your risk of bad debt. When the invoice falls due they will do the required credit control for you to ensure that the cash is collected in a professional and timely manner. They will then finance the invoice as agreed. You notify each invoice to the factoring company – this is typically done electronically to minimize administration for all concerned. So how does factoring work? Well in effect you are selling your invoices. This is where we can help you find the best factoring facility for your business. They all structure facilities differently and the pricing is difficult to understand making it hard to make direct comparisons between lenders. The challenge however is finding the right lender to meet your needs. Factoring is readily available if you meet the basic criteria of selling to other businesses on credit terms. A business will sometimes factor its receivable assets to meet its present and immediate cash needs. Factoring ( also known as invoice factoring) is a financing technique where a company hands its unpaid invoices over to a third-party factoring company in exchange for most of the invoices’ value (usually 75 85) being paid upfront. Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. Within the UK there is a whole market of factoring companies. Freight broker factoring (also known as trucking factoring) is invoice factoring for freight brokers. Factoring allows you to budget with confidence as you are less reliant on when your customers pay. Factoring is a funding option for undercapitalized businesses that wish to improve cash flow. Factoring is not a loan, a form of debt, or a form of equity. On an ongoing basis you will receive 90% of the ongoing invoices you raise the day after you raise them.īy factoring your invoices you are smoothing your cash flow. Invoice Factoring is a form of commercial finance whereby a business sells its accounts receivable (in the form of invoices) at a discount. Initially it will provide your company with 90% of the value of your outstanding gross invoices. Invoice factoring is also known as business factoring, debt factoring and export factoring.Factoring can provide your business with valuable cash flow. The burden of credit control, including chasing customers’ debts, is outsourced, leaving you free to focus on other aspects of your company. When the outstanding invoice is due for payment, your customer pays the balance directly to your funding provider. Some of the credit-control procedure is managed by the bank or funding provider, including chasing debts. The amount of cash you receive is based on an agreed percentage, usually up to 90% of the invoice value but this can be higher. This gives you immediate access to cash tied up in outstanding invoices. Instead of waiting up to 90, or more, days for your customer to pay the outstanding invoice on the agreed credit terms, the funding provider will forward a percentage of the invoice value. Invoice factoring is a form of invoice finance where an invoice funder provides funding against the invoices your company raises to its customers.
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