1. Invoice discounting Invoices - 5 Things You Didn't Know
Factoring invoices has become increasingly popular in recent years with businesses looking to raise
instant capital. This method of raising finance can give businesses an immediate cash injection of up to
95% of the value of their invoices. The money is available to the company before the invoice is paid.
factoring non recourse assignment
Essentially, this is a method of debt collection and journal management. When a company enters into an
Invoice Factoring agreement they are basically selling their invoices to a third party. The invoice
factoring provider will then process the invoices and allow the company to draw loans against the
money owed to your business.
1. This method of finance is used extensively within time sheet orientated businesses such as temporary
recruitment agencies and security firms. They are also common in many other industries including,
manufacturing and wholesaling, as well as the contracting and construction industry.
2. Businesses with a turnover of over £50, 000 and an effective credit control procedures are good
candidates for raising finance this way. New businesses are often seen as an risk, as there is no history of
trading, but some factoring companies will consider start ups. The fees charged may be quite high
initially, but will often be reduced as the company continues to grow and turnover increases. Debtors
are often more inclined to take more notice of a factoring provider, rather than a reminder letter, which
prompts them to pay their invoices on time.
3. Factoring invoices is a quick way of raising funds to purchase new stock, materials, or to pay staff or
suppliers. This could be because business is booming and the company needs to quickly purchase more
stock or equipment, or hire new staff, or perhaps because the company isn't doing so well, and so needs
to make the best use of their finances. It could also be because customers are reluctant to pay, and this
is causing cash flow problems
4. The company can quickly improve cash flow by receiving payment for their invoices before the
invoices are actually paid by the customer. This helps to enable facilitate better financial planning
business growth.
5. For small business, or those operating with limited funds, or those companies who often have
problems with non-paying customers, this method of raising finance can be used instead of a debt
collection service, or having many bad debts. This will allow the company to concentrate on making
sales and earning cash, rather than having to spend a lot of time chasing up customers who haven't
paid.
For companies looking to control cash flow more effectively, and wanting to spend time making sales
rather than chasing non-payers, then Factoring Invoices could be the solution.