Factoring services
If your business has working capital is tied up in unpaid invoices and you need to free up the money, then a factoring service might be the best solution.
Factoring is performance related finance that expands as your business grows. The accent is not on how you use the funds generated from factoring, but that you have a sound business underpinned by good management.
This service allows your business to make larger volume sales with confidence, knowing that as an invoice is issued, funds required to settle supplier bills to complete the order will land in the bank.
This is a key attraction for many businesses that have their cash flow capped by overdrafts or loans.
How much cash could you release from your unpaid invoices? Compare quotes online >>
Factoring services are open to any business-to-business trader with unpaid invoices that affect cash flow by:
- Constricting expansion plans
- Damage financial relationships with suppliers
- Hamper their ability to cover operating costs
Your business can also pick up help behind-the-scenes with invoice factoring, as the factoring company can take on managing your sales ledger down to telephoning clients to keep on top of invoice payment.
For small businesses looking to grow, this is a valuable resource as not only is cash freed up, but also the time of key personnel can be diverted in to business rather than administration.
For businesses that prefer a more hands on approach with customers, invoice discounting offers the same positive cash flow advantages but leaves sales ledger management and dealing with customers firmly in your own hands.
As with all business finance decisions, remember the principles behind the operation of a factoring service may be the same, the way the service is delivered can vary.
Points to bear in mind are:
- Customer service – All factoring companies advertise their customer service and processes are top-notch, but they would, wouldn’t they?
- Availability of funds – Does the factoring company have any funding constraints and will this impact on your business
- Market attitude – How comfortable does the factoring service sit with your business sector, especially if you have export debts and a lot of invoices out to a few key customers
This is the point where a business might consider independent advice about factoring.
Any factoring service looking for business is going to talk up their operation in terms of efficiency and benefits.
An independent advisor can be useful in sorting the wheat from the chaff. You would expect any decent advisor to have their finger on the factoring pulse and have contacts and clients feeding back to them about the real way a factoring company works rather than the hype they want you to see.
Factoring provides a versatile, cost-effective solution to working capital problems for many businesses.
Look beyond your bank and traditional funding sources for a vibrant partner that adds to your business – especially in these times of financial uncertainty.
Factoring services leave your business assets liquid as well by providing a revolving door facility that takes away the need to secure the funding .
How much cash could you release from your unpaid invoices? Compare quotes online >>
Also in this section:
- Overview of invoice factoring
- Factoring UK – Who ‘s in the loop and why
- How to find the best factoring quotes
- Benefits of a factoring service
- Factoring invoices is beneficial for young businesses
- The benefits of using business factoring
- Understanding a factoring service
