Invoice Factoring provides the cash flow finance that your business needs to succeed. It produces immediate cash advances from the funds you are already owed by your customers (debtors), thus increasing your working capital.
Factoring companies will, typically, provide an initial cash advance up to 90% of the value of outstanding invoices within 24 hours. The Factoring agreement will also provide an ongoing facility that increases, in line with the volume of sales and values of invoices you issue.
How Factoring Works
You send out your invoices and credit notes as normal including an assignment notice, providing a copy by post or electronically to the Factoring company.
The Factoring company is responsible for sending out monthly statements and ensuring payment is received on time, having agreed a credit control strategy with you beforehand. This allows you to chase up some of your larger/more important customers yourself, ensuring goodwill is maintained with them, whilst still collecting the money in a timely manner.
Your customers send their payments to the Factoring company who, in turn, credit you with the balance due i.e. less the initial payment and their charges.
The Sales Ledger is updated on a monthly basis by the Factoring company and, using the latest internet technology, you can have immediate and real time access to all your account details from online Factoring companies.
Regular management reports are also provided by the factoring company giving details of the Sales Ledger and your account with them.
Personal Guarantee Insurance
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