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In the UK business owners consider business factoring as a potential solution to cash flow problems because it allows the company or business to benefit from increased cash flow.

A business factoring facility is actually quite a simple concept. A business that sells goods or services on a business to business basis on credit sends its invoices to a business factoring firm who will then issues the business with funds for the invoices. This process enables the business to have working capital and cash flow to run for every day business purposes.

The benefits of business factoring

  • A business factoring facility can be set up in short time. This short time can be advantageous to small business.
  • Business Factoring for many business owners is preferable to a bank loan as there are no credit checks.
  • Businesses in the UK often have to a reduced profit margin if they use factoring. However, if a firm business can absorb the factoring costs with adequate profit margins on its products and services then it can benefit from a factoring facility.
  • Businesses can benefit from cash being received the same day on submitted invoices.
  • Businesses gain predictable cash flow and can pay recurring overheads such as PAYE and staff costs.
  • A business factoring facility enables a business to raise up to 80% or more on its outstanding invoices.
  • Using a factoring company can reduce the time and money spent on debt collection since the factoring business can run your sales ledger, as an option.
  • You 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 can be an efficient way to minimise the cost and risk of doing business overseas.

The benefit of using a business factoring broker

  • Business factoring can be a minefield and so a business broker can provide best advice
  • There are many factoring companies in the UK and so choosing one can be difficult process.
  • The fee structure for business factoring can be confusing.
  • Business factoring may not be the best solution for your business and a broker will assess your case.

To find the best small business factoring quote please call 0800 597 4757. One of the factoring advisers will compare factoring quotes instantly and provide a report for you.