Factoring
Factoring is an adaptable form of finance, which advances money to a business at the point of issuing new invoices.
Factoring involves full ledger management, which will leave you with more time to focus on your core business operations. Factoring products can be tailored to a wide range of business types, however offers a significant benefit to the following businesses:
- Limited companies, Sole traders and Partnerships
- Companies with rapid growth models
- Companies who are experiencing financial difficulties
- Companies with seasonal sales cycles, affecting cash flow
Factoring offers a range of Benefits:
- Immediately frees up cash by releasing up to 90% of the money tied up in unpaid invoices
- Improves cash flow allowing investment
- Flexible credit management is built into the agreement with statements and reminder notices issued to reduce the administration burden for your business
- More Funding - Allows borrowing beyond the levels of normal unsecured overdrafts, usually for a much lower borrowing rate
- Flexible Limits - Funding grows inline with your turnover, the more you invoice the more funding available
Why factor?
Factoring is a flexible form of finance, which advances money to a business as and when it issues new invoices. Factoring can bridge the gap between raising an invoice and getting that invoice paid. Factoring provides the cash flow necessary for working capital and growth.
There are two major advantages of factoring over overdrafts or other forms of personal or business loans, these are:
Factoring is flexible in that the amount you can borrow grows directly with your sales. This is essential to enable companies to fund their growth, since you must usually pay your suppliers before you receive payments from your customers.
No other assets are needed to secure this funding.
How does it work?
When you send out your invoice you also send us the Gross amount, we will then advance funds of up to 90% of your outstanding sales invoices, normally within 24 hours. Some degree of credit management can also be built into the facility. We currently assist businesses of all sizes including sole traders and limited companies from start-up to maturity.
What can factoring do for your business?
Whether you are a new start business or you're enjoying healthy growth and increasing sales, or you're considering expansion, unpaid invoices can really constrain your business. If you are thinking about expanding, the last thing you need is unreliable cash flow. This is where the right factoring provider can help you.
It's a fact of business that many customers delay settling invoices for as long as possible. In many cases you may have to wait 60 days or longer before invoices are settled. This all adds up to bad news when you still need to pay your staff and suppliers on time.
Without the right amount of cash flow when you need it, you may well have to divert precious resources to chasing payment when you should be chasing new business.
Read some Factoring case studies to find out how other businesses have benefitted from Factoring services from Alex Lawrie.
