Factoring and Invoice Discounting

Factoring and Invoice Discounting

At Factoringhelpline.co.uk we offer a range of services all designed to improve business cashflow by releasing some of the cash tied up in the value of invoices.

Whether a sole trader, fast growing start-up or large corporate, we can help you find the right funding to suit your business. The most common invoice finance options available are: Factoring and Invoice Discounting.

Factoring and invoice discounting are commonly used by businesses to improve cashflow but can also be used to reduce administration overheads.

What is Factoring?

Factoring – also known as ‘debt factoring’ – involves selling your invoices to a third party. In return they will process the invoices and allow you to draw funds against the money owed to your business. Businesses that supply a factoring service are called factors or debt factoring companies.

What is Invoice Discounting?

Invoice discounting is an alternative way of drawing money against your invoices.

What is the difference between factoring and invoice discounting?

With invoice discounting the business retains control over the administration of its sales ledger.

Do factoring and invoice discounting have anything in common?

As well as providing finance, factoring and invoice discounting companies offer valuable support services and credit insurance.

Costs and charges relating to factoring and invoice discounting

Initial Payment for factoring and invoice discounting – This is the percentage of the approved sales ledger that we will advance to you. When your customers pay we credit your account with the amount received, less what we are owed.

Service Charge for factoring and invoice discounting – This is the fee for carrying out the management of your sales ledger and credit control.

Funding Limit for factoring and invoice discounting- This has been set to cover your current requirements but can be increased or reviewed as necessary.

Concentration Limit for factoring and invoice discounting – In our experience you should ideally avoid too great a reliance on a single customer. Through monitoring your sales ledger spread we can aim to keep your exposure limited. Exceptions can be agreed subject to the creditworthiness of the debtor concerned.

Discount for factoring and invoice discounting – The discount charge is calculated on the day to day balance of funds advanced to you. Unlike an overdraft, payments credited to your account are available on the same day.

The factoringhelpline.co.uk provides gives information on how factoring and invoice discounting works, the advantages and disadvantages, different types of factoring and invoice discounting, the cost, and how to choose a factor or discounter. Call 0800 597 4757 for more information.

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