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Factoring for improving cashflow


Factoring for improving cashflow

Factoring provides a business with immediate cash advances (up to 90%) against invoices raised to trade customers.

The factoring company is responsible for the sales ledger administration as well as chasing the debts and collecting the payments from customers.

Factoring is suitable for businesses with gross sales of at least £50K per annum. There are no other financial criteria and as such, factoring is suitable for start-ups, phoenix companies, turnarounds and fast growing companies.

Some factoring companies offer what is know as C.H.O.C.’s (Client Handles Own Credit Control) and many businesses prefer this option of retaining the credit control function inhouse

Few companies offer a confidential factoring service. As the name suggests, the factor runs the sales ledger on a confidential basis. Customers are unaware of any funders involvement.

Factoring may also be referred to as accounts receivable factoring, debt factoring or receivables factoring. It is also know as invoice finance or debtor finance.

In summary:

  • Immediate cash advances (up to 90%) against invoices
  • Suitable for start up and fast growing companies
  • Turnover – £50K +
  • Financials – loss making and negative nett worth considered
  • Domestic and export customers
  • Optional bad debt protection
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