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What is working capital?

Working capital factoring is one of a number of cash flow solutions for businesses available from banks and other lenders. In the UK working capital is the difference between current assets and current liabilities. Working capital is simply the level of cashflow needed to satisfy the needs of a business during its normal cycle of trading. Having the correct level of working capital is very important and a lack of working capital can ultimately mean the failure of a business.

What is working capital needed for?

It is also possible to run out of cash if customers pay slowly or a business needs a large stockholding. Working capital is needed to have cash to pay the following:

  • Wages and salaries
  • Operating expenses
  • Rent
  • Taxes

What is working capital factoring needed for some UK business?

In the UK most businesses pay suppliers on agreed credit terms and also allows their customers to pay on credit. It doesn’t take much to upset the balance. What matters is the amount of cash available and the timing of cash coming in and going out of a businesses bank account.

What is working capital factoring?

Working capital factoring involves a business selling its invoices to a third party. In return a working capital factoring company will process the invoices and allow a business to draw funds against the money owed to your business. Businesses that supply a working capital factoring service are called working capital factors or working capital debt factoring companies. Working capital factoring can enable a business to free up cash flow immediately after invoices have been submitted.

Advantages of working capital factoring?

  • Working capital factoring allows you to efficiently grow
  • A business using working capital factoring can ensure that it has the capital need to grow and compete with larger and more established firms.
  • Working capital factoring provides a steady flow of cash to meet the working capital needs of a business.
  • A value added service if a working capital factoring facility is an outsourced book debt collection department.
  • Working capital factoring gives businesses unlimited access to capital
  • Working capital factoring is not a debt that would show up on a balance sheet

Factoring enables you to grow your business. Business Factoring Services are offered by over 50 different companies in the UK and deciding which factoring is most suitable can be a minefield Find out if your business can benefit from business factoring. Call 0800 597 4757 for working capital factoring advice TODAY!!!