Benefits Of Using Factoring

Factoring is the process of releasing money tied up in your unpaid invoices. A business which has £200,000 worth of outstanding invoices could release £180,000 of those outstanding debts and put the cash straight back to work in their business.

You should also keep in mind that Factoring is a service, not just another form of business funding. On top of advancing you cash, a lender will manage your sales ledger, credit control and will even chase payment from your customers.

The cash available to you also grows with your turnover, the more invoices you issue the more cash that is available. Which is why Factoring is seen as the perfect service for aspiring growing businesses.

Key benefits of using Factoring include:

  • There are more Factoring providers now than ever before, meaning the industry is competitively priced
  • Having your Factoring provider manage your sales ledger allows you to focus more on what you do best – growing your business.
  • Your facility can also operate confidentially so your customers don’t need to know there is a funder involved.
  • Often you can negotiate ‘cash on delivery’ discounts from supplier for being able to settle payment early. These discounts can often cover the cost of your facility.
  • Factoring providers also prove to be excellent business advisors, helping you to grow your business.
  • Because funds are released against your invoices, the only limit on how much you can borrow is how many invoices you can issue.

How much cash could you release from your unpaid invoices? Get a quote online now >>

Things to watch out for

Your business could benefit greatly by using a Factoring facility. However, choosing the wrong provider could also stump your business growth.

There are a couple of fundamental things you need to watch out for when selecting your Factoring provider:

Firstly, you need to ensure that your lender understands your business and is going to provide you with the support and funding it needs. If you decide after 6 months that you’re with the wrong lender you could be faced with hefty fees to prematurely terminate your contract.

You also need to ensure you’re business is the right fit for your lender. Some lenders specialise in specific industries, such as recruitment, manufacturing etc. Some also specialize in businesses with larger turnovers, i.e. turning over upwards of £10m.

Mitigate against the risk of choosing the wrong provider by talking through your options with an independent source experienced in Factoring and Invoice Discounting.

How much cash could you release from your unpaid invoices? Get a quote online now >>

Every month Touch Financial help businesses improve their cash flow with invoice finance. Request a quote to find out how much extra cash you could raise.

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