Factoring can be a highly effective way of solving your business cash flow issues allowing you to access cash that is tied up in unpaid invoices. It is possible to release up to 90% of money owing and it can be accessed in as little as 24 hours of raising an invoice.
The advantage of factoring over taking out a loan is that you will not be paying off a lump sum borrowed over a period of time.
You are essentially raising capital your business has already generated via its invoices rather than borrowing from another lender.
Another benefit of factoring is that you do not lose valuable time waiting for an invoice to be paid with all the associated stress and uncertainty.
A factoring company will handle both the sales ledger credit control and collection, freeing up valuable time for you to work on business growth.
Other benefits of factoring
- It is flexible - You do not need to provide additional security as may the case with a loan
- You are free to get on with sales and building the business knowing that invoices raised are being dealt with via a dedicated credit control team
- The agreed percentage of invoices raised can be advanced within 24 hours
- The invoice balance less the factoring fee will be advanced on payment of the invoice
- In can be an option to support export sales
If you are considering factoring as an option a business finance specialists can help you consider your options.