Factoring enables your business to receive money as soon as you raise and invoice and it takes away all the stress of chasing customers for the payment. You can receive up to 85% of the value of each invoice.The balance is paid on collection less the lenders fee. No more waiting 30, 60 or 90 days for the payment.
Are you eligible for factoring?
Factoring can be setup within a week and unlike overdrafts or loans, it automatically grows as your business grows. It is ideal for all kinds of businesses including recruitment, manufacturing, wholesale and distribution, service, transport and logistics and IT.
Factoring is ideal if you;
- Are you a business to business company
- Issue invoices with credit terms from 14 to 90 days
- Have an annual turnover above £50,000
- Are a start-up with a strong business plan
Factoring companies aren’t keen on;
- sale or return terms
- contractual terms
- staged payments
How does factoring work?
- Invoices are raised as normal and sent to your customers;
- Copies of these invoices of them sent to your lender or updated online;
- Up to 85% of invoice value is then made available within 24 hours of the date the invoices are received;
- Monthly statements are sent your customers;
- Reminder letters are sent as per your customers payment terms;
- When payment is received from your customer the balance is immediately available to you.
The benefits to you of factoring
- it improves your cash flow-unlock the money tied up in your invoices. Free up cash straight away to improve your financial planning and enable growth.It can be available within a week.
- up to 85% of invoice value upfront-You then receive the remainder when your customer pays the invoice, less agreed fees.
- invoice payment collection-lenders will have dedicated credit control teams who will remove the headache chasing customers who have not paid, sending statements and collecting payments.
- in some instances you can retain your own credit control function and chase your own customers.
- bad debt protection- will protect you against the risk of incurring a bad debt. Cover varies from company to company but you can obtain up to 100%.
- revolving facility-your factoring facility grows as your business grows, giving you maximum flexibility without having to renegotiate fixed limits.
- Online access, most lenders provide the ability to manage your account online. Submitting invoices, reviewing your account, requesting money and reconciliation of yourselves ledger can be carried out simply online. All lenders however have different systems and some of these facilities may not be available with all.