Invoice Factoring - Release cash tied up in unpaid invoices to use today
Invoice factoring is perhaps the most popular form of invoice finance. Simply put, invoice finance schemes allow your business to receive up-front cash in return for handing over the eventual receipts from a specific batch of invoices. While specific deals can vary, depending on the size of the company and the ease of chasing payments, it is usual for the advance cash payment received to total around 100% of the invoice amount.
Along with the majority of the invoice finance products available, invoice factoring can offer you up to four times the amount of cash to play with compared to traditional bank lending. By growing as your invoice values grow, you will not have to worry about applying for further loans or overdrafts rate, making invoice factoring a true competitor to be considered as a funding option for your business.
Is your business suitable for invoice factoring?
Factoring is suitable for any business which sells goods or services on credit to other businesses. With a minimum turnover of around £25,000 plus VAT, even the smallest of businesses will be considered.
Invoice Factoring is more than a simple cash advance
Factoring means that the invoice finance agency not only provides the up-front cash, but also does the work of chasing up customers and collecting the credit for you. This frees up your precious admin time and makes factoring most appropriate if your small business has not yet established a dedicated credit collection facility.
Invoice Factoring requires little need for collateral
The advantages of factoring, particularly for small businesses, are clear. Your business may find it difficult to access traditional loans, due to a lack of financial history or assets with which to secure money. Invoice Finance, on the other hand, relates entirely to the size of your business, with cash advances growing as your business grows. Money is only provided when invoices are generated, and so it is difficult for you to fall into more debt than you can handle. While many small businesses struggle to keep up with cashflow needs, especially at the beginning of their existence, factoring enables quick release of money from invoices which might otherwise take significant time to chase up.
The Invoice Factoring Agency collect the debt for you
Factoring also enables your business to avoid the financial and time implications of chasing invoices themselves. The training, administrative and salary overheads of establishing independent credit control procedures can be done away with when a professional invoice finance agency is undertaking these functions for you. What is more, since the invoice finance agency makes its money by securing payment from the invoices, your small business can rest assured that nothing will slip through the cracks.
Tailored packages can be sourced from invoice factoring lenders specialised in different industries. The most common of these are recruitment factoring – offering payroll and back end support – and construction factoring – funding cash against uncertfied applications for payment. Invoice factoring can be adapted to most business needs through the different lenders available. Our free service will help you find the right invoice factoring lender for your needs and support you throughout.
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.Get a quote >