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Invoice Factoring Review For Your Cash Flow

A business bank account work very much like a personal account. However a business account allows you to keep all your business transactions seperate to your personal money.

Invoice Factoring Overview

In simple terms it’s a way for businesses large and small, to fund cash flow by selling their outstanding or unpaid invoices to a third party at a discounted price. Invoice factoring can be provided by independent finance providers, or by banks. The factoring company buys the invoices for a percentage of their total value and then takes responsibility for collecting payment.

Invoice factoring works well for business owners that need money quickly, have reliable customers that have a history of paying invoices on time, and can afford the fees that come with selling invoices to a third party.

Invoice factoring should not be considered a loan but a financing solution to keep your cash flow running, and it’s now an increasingly popular form of alternative business funding. This type of alternative finance has grown in popularity since it has become more challenging for businesses with imperfect credit to use traditional finance products from high street banks.

What is Invoice Factoring?

In simple terms it’s a way for businesses large and small, to fund cash flow by selling their outstanding or unpaid invoices to a third party at a discounted price.

What Are The Costs?

Invoice factoring costs differ depending on a number of factors including the value of invoices in question, the size of the company (small business factoring or factoring invoices for larger companies), and the potential level of risk for the factoring company.

How We Can Help

We have a wealth of information on the various factoring services, whether you are looking to factor your business’ invoices selectively, or you need a factoring facility to access funds, ongoing

The Advantages

There are many advantages to Invoice Factoring. Some of the main ones are;

 

  • It’s a quick, safe source of cash flow which releases working capital tied up in unpaid invoices
  • It can lower time spent on administration and chasing late payments since the factoring company assumes responsibility for collecting the debt and also takes over the management of your credit control
  • As experienced debt collectors, factoring companies professional and ‘gentle reminders’ can improve your customers’ and clients’ payment times on a long-term basis.
  • It can provide a more regular cash-flow where there may be different credit terms across your clients and customers
  • You can pick and choose which invoices you wish to factor by selling individually selected invoices. There would be no point factoring invoices from regular payers.

Other Things To Consider

You will need to let your customers know a third party is involved with collecting your invoices
The costs are higher than a bank loan, so this type of finance works best for businesses with a high-profit margin that can absorb the costs and handing over responsibility to a third party for accounts receivable means you will have to give up an element of control.

What Are The Costs?

Invoice factoring costs differ depending on a number of factors including the value of invoices in question, the size of the company (small business factoring or factoring invoices for larger companies), and the potential level of risk for the factoring company.

Most factoring companies purchase invoices in two instalments. The first instalment – the factoring advance – covers about 80% of the invoice value (this amount varies). The remaining 20%, less the factoring fee, is rebated as soon as your client pays the invoice in full.

How It Works

  • You submit details of the outstanding invoices to the factoring company
  • The company then sends you the payment advance (e.g.; 80% of the invoice)
  • Your client pays the factoring company. This could be 30 to 120 days later
  • The factoring company then sends you the rebate (e.g., 20%, less the fee)

How We Can Help

We have a wealth of information on the various factoring services, whether you are looking to factor your business’ invoices selectively, or you need a factoring facility to access funds, ongoing

For a free no obligation consultation to find out how Invoice Factoring can work for your business, fill out your details on the form below and one of our Senior Advisers will be in touch asap

Find the Best Invoice Factoring

Review Your Cashflow with Invoice Factoring

Exciting Futures was created as an all-in-one solution by bringing together the tools or service including invoice facotring for cashflow you may review to run your business! When your business model is mapped out, cashflow is a massive part of your day to day business invoice factoring may be one of the overall cash flow importance needed to review t& streamline costs further

Invoice Factoring will help your Cashflow

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