Factoring: What Is Debt Factoring And How Can It Improve Cash Flow
Saturday, May 17th, 2008 Subscribe To Our Feed
Factoring can provide a fantastic solution for a growing company or a company that has just received an unexpected bill or financial expense such as VAT or Tax demand. With a debt factoring facility in place, a lender will advance you an agreed percentage of the money owed on invoices to specified customers as soon as they are raised. Which can mean your company instantly gets access to up to 90% of the money it is owed
debt factoring
Invoice factoring or Invoice finance is a more accurate name for ‘factoring’ as it is the invoice which is factored. This is by way of assignment of the invoice from the supplier to the factor normally with a notice of assignment printed on the invoice advising the customer of the arrangement and instructing them to make payment direct to the factor when the invoice becomes due for payment.
factoring services
Invoice factoring fees differ, depending on volume, credit-worthiness of the customers sold and overall risk. The discount taken is best compared to a merchant accepting a Visa or MasterCard transaction and receiving immediate payment, less a percentage or discount, before the actual cardholder has paid his or her monthly statement.
Invoice discounting, is similar to factoring and is where the money is made available to you from your invoices, however you would continue to collect the money from the debtors yourself thus managing the debt collection. More often than not, this service is on a confidential basis, where none of your customers know that you are utilising this type of finance.
Factoring solutions enable you to expand your business with the confidence that your cash flow will match your outgoings. Factoring is also used extensively to tailor and fund shortfalls in working capital and to finance other capital assets. So if your business needs a cash injection or more effective cash flow factoring really is worth while looking at for a free and confidential chat to see if Invoice Factoring could be right for your business call Enable Finance on 0800 316 16 12 or visit our Invoice Factoring page at enablefinance.com
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