Cashflow Problems

Introduction to Factoring

Factoring is where an agent (or factor) buys all or some of your outstanding invoices, sometimes called accounts receivable or debt outright, advances you up to 90% of their value and repays you the remaining amount, minus a commission plus interest on the advance when the accounts are settled.

The amount a factor is willing to advance will depend on the calibre of the debtor. You will be granted a higher percentage on money owed to you from a blue-chip company or household name than from a sole trader. The factor then administers your sales ledger, taking responsibility for the debts Sending out account statements to your client and chasing up outstanding payments. Bear in mind however, in some cases they can still pass bad debts back to the clients if these are incurred (with recourse factoring).

Good factoring companies will normally seek to work efficiently and politely with your clients to ensure that your firm’s goodwill remains intact where possible.

What it’s for

Factoring is especially useful for generating working capital, ie when a business needs cash immediately and is willing to pay a commission – normally in the region of 0.5% to 4.5% of the amount outstanding – to release it.

The rates and deals available vary greatly from business to business and it’s always best to get references from the factor’s other clients before entering into a binding contract.

The case for:

On the upside, factoring allows your income to grow in line with sales since it reduces the period of the cash conversion cycle, ie the time between buying your raw materials and receiving cash for the finished product. It also frees your business up from the time-consuming and costly administration of customer account management and liquidates your cash so that you have access to it when you need it.

Factoring is particularly useful when a company is growing rapidly and may need more funds than an overdraft can provide. It can also be useful for smaller companies who don’t want to have to spend time and money managing their own sales ledger.

The case against:

On the downside, there used to be a stigma attached to using a factor – it used to be a sign that a company was in financial difficulties. These days, however it is becoming increasingly common and is often viewed as a viable cash management technique. Additionally, it can be quite an expensive form of finance and sometimes there can be a minimum term of contract with the factoring company, some as long as three years.

Key Points of Factioring

  • Factoring is a popular method for providing funding against invoices
  • Factoring provides full credit control service,
  • Factoring is available with or without bad debt protection
  • Factoring is an excellent tool for proving management information
  • Factoring can be used for start-ups, SMEs, small companies including sole traders and partnerships
  • Factoring is a efficient method to improve cashflow
  • Factoring provides a outsourced credit control solution.
  • Factoring is a flexible financial solution that grows and diminishes in line with the business

Factoring Menu

  • Compare Factoring Companies
  • Compare Factoring Quotes
  • Guide To Factoring
  • Factoring Explained
  • Which businesses are suitable for factoring?
  • The benefits and advantages of using factoring
  • Invoice Factoring
  • Factoring Advice
  • Online Factoring Quotes
  • Factoring Brokers
  • Factoring and Invoice Discounting Frequently Asked Questions
  • Invoice factoring in the UK explained
  • Debt factoring
  • Compare factoring lenders
  • Free Factoring Advice
  • Who uses factoring Services?
  • Glossary of factoring terms
  • What is asset based factoring?
  • What is accounts receivable factoring?
  • How can factoring help a business?
  • What is credit factoring?
  • Factoring in the UK
  • What is Export Factoring?
  • What is Domestic Factoring?
  • Factoring and Invoice Discounting
  • How invoice factoring can solve business cash flow problems
  • What can a factoring company do for your business?
  • Factoring quote
  • Choosing the best factoring service
  • Factoring Invoices
  • What is business factoring?
  • A brief overview of invoice factoring in the UK
  • Choosing the right accounts receivable factoring company
  • Release cash immediately with accounts receivable
  • The benefits of accounts receivable factoring
  • Arranging a factoring accounts receivable facility
  • Business Receivable Factoring Vs Factoring
  • The benefits of using factoring solutions
  • Why do you need a Factoring Consultant?
  • Advantages and disadvantages of small business factoring
  • What you need to know about business factoring services
  • Company Factoring UK
  • How does business debt factoring work in the UK
  • Commercial factoring overview and benefits
  • Looking for a Factoring Company
  • Considerations when selecting factoring companies
  • The benefit of Factoring Brokers
  • What is a factoring broker?
  • Free Factoring Advice Service
  • Finding the best factoring deal for UK Companies
  • Free Factoring and Invoice Discounting Advice
  • Factoring companies in the UK
  • The advantages of using a broker factoring company
  • Factoring future cash payments
  • Broker Factoring
  • How can you or your business benefit from Business Factoring?
  • The benefits of using a broker factoring company
  • An overview of Independent Invoice Factoring Companies
  • Is my business eligible for Asset Based Lending?
  • Which lender is right for your business if your business trades UK wide?
  • Choosing a factoring company to help your business grow
  • The benefits of using broker factoring
  • Factoring for new businesses or startups
  • Factoring for export companies
  • Invoice factoring in the UK explained
  • Factoring Agents
  • Factoring Companies
  • Invoice factoring and finance for SME businesses
  • SME factoring in the UK
  • SME Finance
  • Accounts receivable finance funding
  • Business invoice factoring
  • Buy Invoices
  • Cash flow advice for UK Business
  • Cash flow finance financing advice
  • Cash flow help to business in the UK
  • UK factoring and invoice discounting advice service
  • How can a factoring adviser help your business?
  • UK factoring consultants
  • UK factoring firms
  • Factoring future cash payments for small to medium size businesses
  • Factoring Information
  • Getting a factoring quote
  • Factoring can take the worry away from invoicing
  • Using a factoring company to get money in quickly
  • Recourse factoring explained
  • Non recourse factoring explained
  • Purchase order financing in the UK
  • What is Reverse Factoring?
  • Small business financing
  • Working capital factoring explained
  • Business Debt Factoring
  • Factoring advice for increasing cashflow
  • Factoring to solve cashflow problems
  • Are you looking to change your factoring company?
  • Commercial finance solutions
  • Credit Factoring Advice

Industry Specific Factoring Options

  • Courier Companies
  • Recruitment Companies
  • Logistic Companies
  • Construction Companies
  • IT Companies
  • Manufacturing Companies
  • Media Companies
  • Advertising Companies
  • Printing Companies
  • Publishing Companies
  • Professional Services
  • Retail Warehousing Companies
  • Distribution Companies
  • Phoenix Companies
  • Haulage Companies