Factoring is a type of Invoice Finance that is gaining popularity due to its flexibility and ease of borrowing.
Like a loan, with factoring you are borrowing against the assets in your sales ledger, however unlike a loan you don’t receive a lump sum that you have to pay off over time.
The benefits of factoring means that you no longer have to wait between 30 and 90 days to receive what you are owed. By using factoring, a factoring company pays you up to 95% the value of your invoice almost immediately which improves your cash flow and allows you to use the money however you like.
Factoring and releasing the money held up in your sales ledger can represent a really huge amount of cash and can therefore really release the potential in your business.
You issue your customers with their invoice in the usual way and the factoring company then pays you up to 95% of the overall value of the invoice often with 24 hours of raising the customers invoice. The factoring company with then collect the money directly from your customers. Once your customers have paid your loan is paid off.
Some of the benefits of factoring are as follows:
If you think that factoring my be the right solution for your business it is worth speaking to a Business Finance specialist to make sure that you make the right decisions for you and your business.