Factoring is an advance against your outstanding sales invoices and includes full or partial credit management. Invoice discounting is also an advance against outstanding sales invoices, but there is no intervention in the running of your sales ledger, and it is usually provided confidentially; your customers will be unaware how you have chosen to fund your business.

In a non-recourse contract this means they are within customers’ credit limits. In a recourse contract it means where they are within general or specific account financing limits, and less than 90 to 120 days old. All disputed debts are normally unapproved and you’ll be responsible for resolving these as a matter of priority.

Some clients are concerned it may be difficult to repay a facility once in place. This can apply to most forms of finance, but is particularly relevant when comparing debtor finance with, for example, an overdraft. In reality, the facility becomes integral to the business. Repayment eventually comes from improved cash management and retained profits. The danger is to create a ‘hardcore’ of borrowing by using funds outside the working capital cycle e.g. by purchasing fixed assets or making long term investments.

All debtor finance facilities are subject to notice of between 30 days and 1 year, details of which will be set out in the offer letter and legal documents. Should you decide to repay the facility earlier, you’ll need to negotiate a settlement figure or termination charge.

Choosing the wrong facility or wrong factor could lead to unduly restricted funding or inappropriate service for your needs.

With co-operation and good information, the process should rarely take more than a few weeks and can often be completed in days.

With your authority, the factors will obtain any necessary waivers from your bank or other debenture holders and make cash available as soon as they’ve loaded your details onto their systems and verified the validity of your outstanding invoices.

You may be given an in principle offer setting out headline terms and conditions at, or following, the initial meeting, but a formal offer will only be made after a satisfactory audit has been completed. Once you’ve accepted this offer, the funder will draw up the legal documents for your review and signature (ideally after you’ve taken legal advice).

Potential funders will want to meet you to understand your business and needs. If that meeting goes well, they’ll conduct an on-site audit of your books and records. For smaller factoring deals this can often be done in one visit, but otherwise separate visits may be required.

The truth is very different. The market has developed a sophisticated portfolio of subtly different products, delivered in a variety of ways using different technologies by companies with cultural differences. Understanding and keeping pace with these developments, and the personalities involved, is a full time challenge that any general adviser, let alone prospective client, would find impossible to meet.

The misconception is that because debtor finance products are relatively simple to understand, they appear to be the same regardless of the provider.

We maintain working relationships to director level with over 100 debtor finance companies and receive virtually the same level of introductory commission from each of them.

Our commitment has always been to do the best for our clients and take the widest possible view of their situation to formulate the most appropriate solution to meet their needs.

Nothing, our service is free to use. We only receive a commission from invoice finance providers upon a successful introduction.

By Jeffrey Eow Operations Director

Invoice finance services such as Factoring or Invoice Discounting provides your business with cash, by allowing you to raise finance from the unpaid invoices owed to you.

For many businesses, outstanding sales invoices are their largest asset with up to one quarter of a business’s overall yearly turnover remaining unpaid at any one time. This “locked up” cash can greatly impact the growth potential of a business and may sometimes force a business into insolvency.

There are both advantages and disadvantages to businesses raising cashflow this way, so businesses owners need to be careful about not jumping into a factoring or invoice discounting facility without clearly thinking it through.

We can help you obtain an invoice finance facility to release cashflow that can be used in almost any way you see fit. Perhaps your business needs to make pay staff or buy products, or perhaps you are looking to expand and grow your business. The flexibility and lower costs than other forms of finance offered by this sort of business finance is one of the reasons it is so popular among UK businesses.

Up to 90% of invoice value available immediately with the balance when the customers pay

Open ended facility – Finance grows in line with sales

Invoice finance Can Be Used for Almost any business sector

Low Interest Rates

Fast Approval

Available for new start businesses

invoice finance business cashflow

Even though a business may be trading profitably, it can still fail if cash is not available. Factoring is a method used by a business to obtain cash when the available cash balance held by the firm is insufficient to meet current obligations and accommodate its other cash needs, such as new orders or contracts. Factoring releases the cash tied up in unpaid credit invoices and allows a business to grow and compete with large or more established businesses.

Obviously, any loan scenario is subject to the borrower’s credit history and ability to repay. A more favourable financial position allows for more favourable loan terms. This includes higher borrowing amounts and lower interest rates.

OTHER ADVANTAGES TO CONSIDER

Invoice factoring offers a number of advantages to businesses over other forms of finance. However, it is important to understand how a facility works before making a decision on whether to undertake invoice financing.

Benefits

The principle benefit to any business of invoice factoring is that it provides quick, timely and significant increase to a company’s cashflow. This is an important aspect to businesses short of working capital, especially when finance of 80% of outstanding debt can very often be leveraged. Other principle benefits include:

Sales ledger can be outsourced, freeing up resources

Money is available from your sales ledger as soon as it is invoiced

Money is available for any business purpose such as funding advance orders or capital investment

Non-recourse factoring offers protection from bad debts

The factoring provider can provide valuable information about the credit rating of your customers

The factoring provider can sometimes assist in negotiating better terms with your suppliers

You do not have to deal with customers attempts to delay payments and often customers will pay more promptly because they are dealing with a professional factoring company

Provides a smoother cashflow and allows for improved financial planning

Our invoice finance experts use in-house systems to quickly search the whole of the market for the deals that not only meet your requirements but offer the best rates and terms depending on your personal circumstances. They will compare these deals side by side and make their recommendations along with a fully transparent analysis of all the costs that would be incurred before you make any decision to proceed with an application.

Because our team specialise in invoice finance we have a full understanding of each individual lenders underwriting processes. The things they like, the things they don’t like, the level of risk they are prepared to take and what charges and rates they place on that level of risk. Our experts will be in a position to help you choose the best provider with the best deal and make an application on your behalf that has the highest chance of gaining swift approval from the provider.

Call Us For FREE Expert Advice on Factoring, Invoice Discounting and Invoice Finance options.

We source the best factoring, invoice factoring and invoice finance deals from the whole market