Factoring Information to UK business looking to improve cash flow
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.
Searching for business factoring information and worried about your credit record?
You don’t even need a lengthy trading record – although some factors prefer this, most will now advance money to businesses which have been trading for less than twelve months, and many who specialise in start-ups. One type of business, which finds this especially useful, is the recruitment industry, where clients may not pay for several weeks after invoicing, but where the temporary members of staff have to be paid at the end of each week.
Factoring information for startups
Please note that factoring can provide much needed finance for startups. If a new business is financed the owner / manager, then funding will limited and getting any first orders can place a lot of pressure on the businesses cash flow needs.
Factoring information for SME
The SME sector is a vital one in the UK economy. It is estimated that there are nearly 7 SME businesses in the UK. Few growing SME business are able to finance their expansion plans from cash flow alone and on the other side of the coin they are unable to borrow from banks because banks are particularly nervous of smaller businesses due to a perception that they represent a greater credit risk.
Factoring information for recruitment consultants
Many factoring businesses overtrade because their sale force often bring in deals that sound fantastic, such as a contract for 20 temps but the reality is that these temp need to be paid. Owners of recruitment firms have the choice to either share a large contract with another agency or consider using factoring to finance expansion. The worst scenario for a temp recruitment company is that its clients go insolvent leaving them to pay the temp or contract workers. That is why there must be enough cash in the business to cover client failures.
Factoring information for new businesses
Factoring provides a large and quick boost to cashflow for new business. This may be very valuable for businesses that are short of working capital. A business that is owed £500,000 may be able to get £400,000 or more in just a few days. Factoring for new businesses may be because a business may be given useful information about the credit standing of your customers and they can help you to negotiate better terms with your suppliers
Factoring information from banks
In the UK many banks offer factoring services. Factoring is a very convenient way of raising funds by selling invoices to a third party. Most bank factoring services are suited to businesses with an annual turnover of £50,000 or greater, who sell to other businesses on credit terms
The cash – enables business to raise cash against your business to business invoices Improves cashflow. The more your sales book grows, the more we’ll help you to turn your invoices into cash, enabling you to concentrate on running your business
Factoring information from specialist factoring firms
Specialist factoring firms operate unique niches in the factoring business. The idea of being a niche factoring company is to offer sales ledger management services providing an immediate cash to increase our working capital needs and improving cash flow A specialist factoring firm will find niche financing solutions along and innovative approaches to fund businesses that other banks or factoring companies cannot.
Factoring information for companies in international trade
Factoring is commonly used by international businesses to improve cash flow but can also be used to reduce international administration overheads. Businesses that supply this service are called international factors or international debt factoring companies.
Factoring information for intermediaries
Factoring can normally be arranged through factoring brokers or factoring intermediaries. Factoring Brokers are full-time specialists offering advice and help in arranging invoice factoring. Factoring is a flexible source of finance designed to improve cash flow and fuel business growth.
A good factoring facility can offer up to 95% of your invoice values within 24hrs.
Factoring information for large firms
Large businesses have times when working capital financing is necessary when there are too many outstanding invoices and slow payment from customers. That’s when a good factoring facility can really make difference. Factoring offer large firms the money they need to increase or sustain profitability and even fulfill payroll and tax demands. Factoring can help large firms take advantage of current and new business opportunities until completed jobs have been paid in full.
Factoring information for established firms
Factoring is a method used by established firms to obtain cash when the available cash balance held by the established firm is insufficient to meet current obligations and accommodate its other cash needs, such as new orders or contracts. Established firms use factoring to obtain the cash needed to accommodate the firm’s immediate cash needs will allow the firm to maintain a smaller ongoing cash balance.
Factoring information for constructions firms
The construction industry which is responsible for putting up houses, corporate offices, factories, schools, apartments, bridges, and roads. In the UK a factoring facility can be used by a construction company to obtain cash when the available cash balance held by the firm is insufficient to meet new order and contracts. By using a factoring facility the construction sub-contractor, or construction company, does not have to wait for payment before starting on the next stage of a project, or begin construction on a new project
Factoring information for accountants
Accountants work very closely with their clients and have a good general understanding of accounting procedures and business. A good accountant is an integral part of a business. Most accounts love the idea of factoring as it completely speeds up the cashflow cycle.
Factoring information for building firms
In the UK the building firms are made up of a multitude of skills. The building industry generates a wide range of products that are commonplace in the lives of people of ages. Cashflow is of the upmost importance as costs associated with technical advancement and research are constantly rising and changing.
Factoring information for IT firms
Most IT businesses have the ability to increase their sales but are held back because of a lack of capital can benefit from factoring. The IT sector is service based and has high staff costs. IT firms can use factoring to expand.
Factoring information for businesses based in the USA
Businesses in America have been using factoring for decades. Firms in the USA love the increased cash flow that a factoring facility can offer. They find the benefits of improved credit rating and purchasing power enable them to stand toe to toe with larger and more well established ISA businesses.
Factoring information for businesses based in mainland Europe
Please note that there are some factoring company’s that deal solely with business that trade in mainland Europe. Some businesses that trade in mainland Europe lack working capital, which can business growth. New businesses that want to trade in mainland Europe do not have a healthy looking set of ledgers, but this doesn’t matter because as long as you are submitting regular invoices that’s all that matters.
Factoring information for entrepreneurs
Today credit information and insurance coverage is available any time of the day or night on-line. The web has also made it possible for factors and their clients to collaborate in real time on collections. Acceptance of signed documents provided by facsimile as being legally binding has eliminated the need for physical delivery of ‘originals’, thereby reducing time delays for entrepreneurs.
Factoring information for insolvent businesses
Strong cash flow is the main element of business longevity. Its acceptance has grown over the years since its introduction to the UK in the 1960’s, and is now rivaling traditional forms of funding such as the overdraft. This sway in popularity is likely to continue following recent legislation such as the Brumark case (which called into question the bank’s reliance on debenture based lending for their overdraft facilities). Most factoring firms will happily offer factoring to phoenix companies or firms in CVAs.
Factoring information for phoenix businesses
A phoenix company is where the assets of one Limited Company are moved to another legal entity. Often some or all of the directors remain the same and in some cases, the new company has the same or a similar name to the failed business. If you are involved in a phoenix style business there is specialist factoring services that are certainly available to help.
Get factoring information here by calling 0800 597 4757 or apply online.
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