Invoice Factoring is a very simple, uncomplicated form of finance, however it is commonly one that is misunderstood.
The essence of an invoice factoring agreement is as follows:
When a business enters in to an invoice factoring arrangement, it assigns the sales invoices that it issues to its customers, to a finance provider. Then, within a period of 24 hours of receiving the invoices, the finance provider will pay the business up to 90% of the invoice value in cash.
The remaining balance – less the finance providers’ charges – is then paid to the business once the debt has been collected.
The services can be applied to export as well as domestic trade debts.
Step 1 – You provide a service/product to a customer and invoice them.
Step 2 – You send the factoring companu invoice details, electronically or by post
Step 3 – The factoring company advances you up to 90% of the value of the invoice by the next working day
Step 4 – The factoring company collects the value of the invoice
Step 5 – The factoring company forwards net income value to you minus costs