Invoice Factoring 2018-06-15T12:14:11+00:00

Invoice Factoring

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What is Invoice Factoring?

Invoice Factoring is a commercial finance product that can be used to raise money for a business using their outstanding invoices. It is designed to improve cash flow by releasing funds from the debtor book.

A set percentage of the invoice is released to your company immediately by the lender. The remainder is then released when the invoice is paid, minus an agreed percentage which is paid to the lender.

Invoice finance can be broken down into two main products, invoice factoring and invoice discounting. Invoice factoring, in particular, is often used to solve issues associated with customers taking too long to pay, or requiring regular chasing.

Our experienced invoice factoring specialists are on hand to secure you the best terms by comparing lenders from across the whole market.

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Latest Invoice Factoring Offers

Check out the latest offers, find the perfect product for you and apply online instantly.

Product IF0001 - Apply Now
Disc Charge (From)
1.5%
Service Charge (From)
0.25%
Max Advance Rate
90%
Min Turnover
£60,000
Products Offered
Factoring & Discounting
Min Trading Time
From Start Up
Product IF0002 - Apply Now
Disc Charge (From)
1.5%
Service Charge (From)
0.35%
Max Advance Rate
90%
Min Turnover
£400,000
Products Offered
Factoring & Discounting
Min Trading Time
From Start Up
Product IF0003 - Apply Now
Disc Charge (From)
1.5%
Service Charge (From)
0.4%
Max Advance Rate
90%
Min Turnover
£50,000
Products Offered
Factoring & Discounting
Min Trading Time
From Start Up
CLICK HERE TO COMPARE MORE MARKET LEADING PRODUCTS

How Does it Work?

Invoice factoring is designed for companies who are either smaller or do not have robust credit control systems in place. Factoring is designed to fund your entire sales ledger. When taking out a factoring facility, the lender will take over credit control.

As a result of the lender’s role in credit control the facility is, by nature, ‘disclosed’. That means your customer will be aware of the fact you’re using a factoring facility.

The full-service approach, including credit control, is more secure for the lender, meaning factoring will usually offer the highest advance amount. High advances combined with the inclusive credit control means your business will save considerable time and will have maximum cash flow.

This allows business owners to focus solely on their company’s progress, with far less time concerned by credit control and managing cash flow. The flip side to this is that customers will know that invoice factoring is being used due to the lender’s control of your outstanding invoices.

Invoice Factoring In Practice

  1. You send your invoice to clients and copy in your lender. The invoice usually dictates payment to an account other than your main bank, usually a lender controlled account that is used specifically for factoring.
  2. Once the invoice is paid, your lender will let you know and the remainder of the funds due to you are released.
  3. The lender will then release the funds to you, usually the same day or within 24 hours.
  4. The payment is chased for you, meaning you can focus on delivering the next order, without worrying about payment.

Working with ABC Finance Ltd

We are focused on saving UK businesses money. We strive to find the cheapest and most suitable products for each client. Every business is different and we tailor each quote individually, working with industry-leading factoring companies to secure you the best possible terms.

We take the hassle out of finding the best factoring facility, advising you every step of the way and managing the process through to a speedy completion.

We aren’t tied to any individual lenders and, as such, can focus solely on finding the right deal for you. On top of this, we don’t charge for our service, meaning there are no broker fees to pay at the end of the process.

The Benefits & Drawbacks of Invoice Factoring

As with any financial product, there are pros and cons to invoice factoring. Our expert team are on hand to help you decide whether it’s right for you but here are the main points to consider:

Benefits

  • Cash flow is improved by taking out factoring as funds are released immediately. As soon as the invoice is issued, funds can be released to your bank.
  • By taking out a factoring facility, you have no need for a credit control team. In many cases, the cost of hiring a credit control team can far exceed the cost of invoice financing. As a result, factoring can offer you a fully managed credit control team for a fraction of the cost.
  • Due to the credit control services offered by lenders, you would no longer have to spend time chasing payments. This would all be done for you, leaving you free to focus on what you do best.
  • Lots of businesses accelerate growth using invoice factoring. The certainty of immediate payment means cash flow becomes far less of a worry. Often the funds released early can be put to good use to help the business.
  • Negotiate improved terms with suppliers due to your new-found ability to make prompt payments. Improved cash flow can be put to good use for this purpose amongst other things. The benefit in this area alone can often more than cover the cost of the facility.

Drawbacks

  • Your customers will know that you’re using invoice factoring, which may not be ideal for some business owners.
  • You lose control of outstanding debts, meaning you can’t manage a relationship with your customer if they are late paying. This is actually seen as a benefit by some business owners, however, as it means they can’t be leaned on by clients to accept late payments.

Is Invoice Factoring suitable for my business?

Invoice factoring is suitable for any B2B businesses that would benefit from improved cash flow. If delayed payments from creditors hold back your ability to efficiently run or grow your business, factoring could help.

By receiving payment almost as soon as the invoice is raised, everything from payroll to paying suppliers and managing growth becomes simple. The revolving funding line is designed to grow with your business and is naturally in tune with your busy periods.

When compared to other business funding options such as overdrafts, business loans and peer to peer lending, invoice finance is often the most flexible option. By transferring credit control to your lender, the benefit can easily outweigh the cost. The time saved worrying about chasing payments can now be spent on running your business.

Bad Debt Protection and Other Add-ons

Bad debt protection can be added to your factoring facility. It is designed to ensure that you receive payment even if your customer is unable to settle the invoice. Our lenders are able to offer full protection against bad debt, meaning you no longer have to worry about companies failing to pay.

In the event of customer insolvency, the whole process is managed on your behalf, meaning you don’t have to spend time negotiating with liquidators. This can save significant amounts of time and stress.

Bad debt protection and other add-ons increase the cost of your facility. Our expert advisors are able to talk through your options, explaining each product clearly to ensure you understand your options.

Call Us Today or Enquire Online

We are experienced factoring specialists and have relationships with all the top invoice finance lenders. By working with us, you can access the whole market through one quick, simple enquiry.

We manage the whole process for you, meaning you can relax while we negotiate with multiple lenders on your behalf to secure the best terms. Enquire online now or call us on 01922 620008 to get a free personalised invoice factoring quote.

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