Factoring Invoices

Factoring Invoices

Factoring is not a loan; it does not create a liability on the balance sheet or tie up assets. It is the sale of an asset, namely, the invoices. In addition to paying up to 90% of invoice value with 24-48 hours a factoring company can also take over a significant portion of the accounting work for their clients, help with credit checks, and generate management accounts to aid the smooth running of the business.

What does the factoring of invoices of involve?

In the UK factoring invoices is useful for businesses that need to speed up the payment of invoices for goods and services that have been sold to customers but not yet paid for

Factoring invoices is has lots of advantages to cash-hungry businesses

Factoring companies take total control of the accounts receivable function. Companies with high stock levels and outstanding invoices need to invest that money more quickly than if they wait to receive it.

Please can note that factoring invoices is a very expensive method of financing, at 1-3% of sales, and a business that factors invoices will lose significant control over its book of receivables.

What are the advantages of factoring invoices?

  • A factoring facility can be set up in short time. This short time can be advantageous to small business.
  • Factoring invoices for many business owners, is preferable to a bank loan as there are no credit checks.
  • Businesses can benefit from cash being received the same day by factoring invoices.
  • Businesses gain predictable cash flow and can pay recurring overheads such as PAYE and staff costs by factoring invoices
  • A business factoring facility enables a business to raise up to 80% or more on its outstanding invoices by factoring invoices
  • .By factoring invoices a business can use the factor’s credit control system to help assess the creditworthiness of new and existing customers – this is especially useful if you do a lot of business with companies whose turnover is lower than £1 million and who do not have to file full returns with Companies House.
  • Factoring invoices can be an efficient way to minimise the cost and risk of doing business overseas.

The factoringhelpline.co.uk will be to assess whether your business is suitable for factoring invoices and be able to refer you to a factor. All the staff at the factoringhelpline.co.uk un understands most business modes and will be able to source a factoring company that suits your needs and has the financial resources to pay invoices with 24-48 hours

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