Is receivables factoring right for your company?
Receivables Factoring can be a convenient way of releasing much-needed cashflow from your business without having to sign up to a bank loan.
There are many advantages to using Receivables Factoring to accelerate cashflow, not least the fact that your business is tapping into a natural asset – if your company issues invoices to customers on a regular basis, then it is possible to consider Receivables Factoring to boost cashflow, either for maintaining the day-today running of your business in an uncertain economic climate – or to fund development into a different market, for example.
How Receivables Factoring could work for your Business
Receivables Factoring is now a growth market for many businesses whose normal cashflow has been affected by the current financial climate, in which customers may take longer to pay invoices – and some may not pay at all.
The main benefits of Receivables Factoring are:
- Flexible and reliable working capital based on your sales ledger
- Factoring means the factor takes responsibility for collecting monies owed by your customers
- Customers may actually be encouraged to pay invoices in a more timely manner once a factor is involved in collection of monies owed
- Your business could save money by factoring out its sales ledger, rather than employ in-house staff
- You could save yourself and your staff the stress of having to chase up invoices once the factor has taken over this role
- Accounts Receivable Factoring can release cash fast for all your business needs
- Export Invoice Factoring leaves collecting monies due from overseas customers to experts with agents on the ground in the country you are trading in.
Cash Acceleration using Factoring – What you need to know
Like any financial arrangement, there are a few issues you may need to address before you sign up to factoring or invoice discounting.
- Your chosen factoring provider will need to carry out an audit of your business before being able to give an accurate assessment of how Invoice Factoring will work for your business.
- This can actually be an additional benefit as you will be receiving an expert independent appraisal of how to get your company back into financial health if you are experiencing cashflow problems – or areas in which your business could develop with just a minimal factoring arrangement, such as Single Invoice Factoring involving one client’s invoices, or Selective Invoice Factoring, involving clients you choose.
- You could also opt to factor one invoice at a time if one of your customers has a high credit limit with your company or you have high value receivables.
- This means you could receive up to 95% of this invoice within 24 to 48 hours of its issue, leaving the factor to collect the monies owed.
Bear in mind that any factoring or invoice discounting arrangement is a finance agreement – you should expect the same conditions and protection as any other credit agreement offers, but bear in mind: - A Factoring solution places a credit liability on your business account
- Factoring arrangements might mean your overdraft credit risk is lowered – but Receivables Factoring can actually help your business manage it overdraft facility with pre-payment of invoices by the factor.
If you would like more help and information getting started on the process – with quotes from regionally based, independent factoring and invoice discounting providers, complete the online enquiry form.
You will receive free quotes for Receivables Factoring within 48 hours – and our agreed suppliers are specialists in dealing with SMEs, so you can be confident about receiving the best small business factoring deals from independent invoice factoring providers.
Tags: accounts receivable factoring, bank, cashflow, factoring, receivable factoring, receivables, receivables factoring, Small business factoring
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