Invoice Factoring
Factoring invoices means that a factoring company will provide you cash against your existing debtor book and finance invoices as you raise them. The factoring companies do this by providing up to 90% of your invoice value with the balance made available when your customer settles the invoice. The factoring company will also help you collect in outstanding payments by way of their credit management service which will be a mixture of statements, letters and telephone calls.
Why Should You Factor?
Factoring invoices allows you to release cash that is tied up in your debtor book. Cash is the life blood of any business and it is imperative that your business has sufficient cash flow to survive, thrive and grow. By using the credit management services that factoring can offer it also frees up time to concentrate on what you do best - growing your business.
How Does Factoring Affect Your Customers?
Factoring invoices typically means that the factoring company will help you to collect in payments for outstanding invoices. Outstanding invoices are chased by letter and phone calls and statements are typically issued to customers on a monthly basis. Most businesses that purchase on credit terms will be used to hearing from factoring companies on a regular basis. If you feel that you don't want your customers to be aware you are factoring you may wish to consider confidential factoring or confidential invoice discounting.
Not sure what the stages of invoice factoring involve? Have a look at how factoring works.
