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Factoring is a flexible form of business finance available in the UK, which advances money to a company as it issues new invoices. Factoring money tied up in invoices can be an ideal solution for business owners that cannot afford to wait 30 to 60 days to get paid.

The importance of factoring and getting money in quickly

An efficient invoicing is advantageous to a business and to its customers; an invoice indicates money is owed or owing. The context of the term invoice is usually used to clarify its meaning, such as ‘We sent them an invoice’ (they owe us money) or ‘We received an invoice from them’ (we owe them money).

The advantage of a factoring company is that it will lend a company a certain percentage of each invoice that it issues; it will then collect the invoice when it becomes due and pay the balance back to the issuing company.

The factoring company charges a fee, usually a very small percentage of the value of each invoice and interest on the amount of money borrowed. This is approximately 1-3% of the invoice value.

Business use factoring to get outstanding money in more efficiently

  • Most business are cash hungry due to staff, stock, sales or production costs
  • Most have a continuous outflow of expenses that need to be paid such as salaries and rent.
  • In business in customers pay their invoices in 30 to 60 days and you have to wait for your money.
  • The reality for business is regular money needs to be spent on expenses but money is irregular on the income side.
  • In business unless you have enough funds to cover the gap in having no money, your business can get into serious problems.
  • Factoring get clients to pay sooner as they tend to be more aware of a factoring companies collection techniques.
  • The idea of factoring money is fairly simple. You sell your invoice to the factoring company, who gives you an initial advance of 90% of the invoice.
  • In the UK a factoring program can be set up quickly

Financing a business, especially in today’s environment, is very challenging. Call 0800 597 4757 to get advice on factoring money for the speedy payment of invoices.