The Benefits Of Using Broker Factoring
Unless you’re very fortunate, cash flow is often a problem for a business and this is especially true for ones which are newly established or in a period of growth. For the former it’s a question of building up cash reserves at a faster rate than it’s needed for outgoings and for the latter it’s a question of being able to fund the growth as it happens.
In both these situations factoring is a solution that companies often turn to to provide that cashflow. The reason for this is simple – it’s a relatively straightforward way to turn outstanding invoices into assets against which money can be raised. Depending on the factoring company used and the situation of the business, this can amount to up to 95% of the invoices’ value. The factoring company then takes on the task of getting payment from the customer and pays the business the balance when this is received.
Any business planning to go down this route has two options – to approach lenders directly to get quotes and make a decision based on what they find, or to use broker factoring to make a choice.
Before embarking on either choice, it’s vital that a business needs to understand the different aspects of each.
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A guide to lenders
There are a very wide number of lenders which are available to provide this service to businesses.
Choosing the right one can be hard
Among these lenders, many have particular specialities. They may concentrate on a particular business sector or in businesses of a particular size or stage in their development. However, because there are so many available, it’s not always easy to locate the best ones to help drive your business forward.
You need to share a way of working
Any lender you choose is, inevitably, going to take on the responsibility of dealing directly with your customers in what can be a very sensitive area – the collection of payment. You may have put a great deal of time and effort into building a good relationship with your customers you you need to be sure that a lender will maintain that relationship. Again, this is potentially a problematic area and one which will only become clear after you start working together.
You need a good relationship yourselves
Your own relationship with the lender is a very important one – and hopefully it will be very long lasting too. So getting that fit of cultures really is important
The benefits of broker factoring
Many of the issues you might face by approaching and choosing lenders yourself can be overcome through the use of broker factoring.
Just like every other broker, those involved in factoring are the go-betweens for businesses and the lenders. However the value they can add in doing this is enormous.
Find the right lender
Brokers such as Touch Financial have links and longstanding relationships with a wide range of lenders and are in the ideal position to identify which would make a particularly good match in terms of culture and approach.
Save money
In many cases, the use of broker factoring can also lead to special offers and deals that might otherwise not be available if you approached the lender directly.
Save time
A broker has systems set up to take your business information only once before forwarding to a number of lenders to get their quotes. This saves a great deal of time that would otherwise be spent getting individual quotes.
Broker factoring from companies like Touch Financial is also completely free to businesses as it is financed by commission paid by lenders for successful introductions. When all the benefits are compared with the potential disadvantages of dealing with lenders direct it really does make sense to get a quote today.
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Also in this section:
- A factoring brokers role
- How to find the best deal from a broker factoring company
- The difference between broker factoring and going direct
- Considerations when selecting factoring companies
- Company factoring UK - Which lender is right for you?
- The role of an invoice discounting broker
