Why factoring?

Introduction

A factoring company will free the funds locked up in a business’s unpaid domestic and overseas sales invoices. They can advance typically up to 90 per cent of the value of the unpaid invoices (less a small service fee) within 24 hours of your raising them. The balance is available, when the customer settles their outstanding debt. A sales ledger and credit management service is provided as part of the service. A good factor will work with their client to collect their invoice payments and ensure that good customer relationships are maintained.

Export invoices can be funded in either sterling or local currency. Multi-lingual credit controllers are on hand to minimise payment excuses.

Factoring is suitable for businesses ranging from start up to maturity, providing goods or services on credit terms to other businesses.

Factoring can bring savings for you and your business. The ability to access cash against your unpaid sales invoices can save you time from chasing customers who do not pay until they are ready. The factor will send statements and reminder notices, once again saving valuable administrative resources, leaving staff free perhaps to research new customers. A credit vetting service is also on offer, to ensure all your hard work courting these new businesses are not wasted through bad debts.

How many times has your bank manager called, concerned about a growing overdraft?

With factoring the rigidities of traditional funding are removed, the funding grows with you, leaving you free to take advantage of business opportunities – which often need cash, which would be available to you.

This will save you from external pressures, which need not interfere with the day to day running of your business.

In summary the benefits of factoring could include:

1. Flexible funding linked to your current, and future trading levels and needs. This is in contrast to traditional finance, which is based on historical balance sheet ratios.
2. The ability to plan ahead more confidently, because you know that a fixed percentage of monies invoiced out will actually be available at any given time.
3. Extra up-front finance gives you extra bargaining power in dealing with suppliers. You can take advantage, for example, of bulk purchase, or prompt payment discounts.
4. Businesses currently starved of cash through lack of traditional security can release value from their sales ledger.
5. Access to credit ratings allows confident trading with new enquirers, you too can take advantage of the wealth of payment experience at the factors command.
6. Funding can be used to take advantage of a wide range of opportunities to help you expand your business.
7. Expert help can be extended when expanding into overseas markets, giving you the peace of mind despite the physical distance.

The UK Factoring and Invoice Discounting Helpline offer finance and recovery options to businesses based in the UK. The financial solutions they offer include

• Factoring Advice
• Invoice Discounting
• Export Finance
• Stock Finance
• Trade Finance
• Asset Based Lending
• Account receivables finance
• Commercial Mortgages
• Asset Finance
• Company insolvency advice

For more information, call the Factoring and Invoice Discounting Advice Team on 0800 597 4757 or apply online at www.factoringhelpline.co.uk