Lets explore how can Factoring help a business grow and plug gaps in cashflow?
Firstly lets talk about how factoring works and what it does. Factoring is a type of business finance that releases cash from unpaid customer invoices.
So if you trade B2B and give your customers credit (eg 30 days payment terms), then you will be owed money from your customers.
What factoring does is give you quick access to the money that is tied up in your trade debtors. Typically you could release up to 90% of your outstanding trade debtor balance, helping ease cash flow pressures.
Would getting paid quicker help your business?
What Are The Benefits Of Factoring For A Business?
There are a number of potential benefits of Factoring that could help a business. Factoring provides a long term solution for cash flow issues caused by fast growth and slow paying customers.
Here are just some of the possible benefits a business may get from using Factoring finance.
- Access 90% of Sales Ledger
- Outsourced Credit Control and Collections
- Ease cash flow pressure
- Long term finance solution for fast growing businesses
- Could offer better credit terms to win more business
- Revolving facility, only repay capital when customer pays
Its worth noting that each lender will have its own terms and conditions that may vary. A Factoring facility will incur interest and/or fees.
As every business is different is worth speaking to a commercial finance broker about your options. Factoring may not be the only available finance solution for your business. Also some lenders only cover certain sectors.
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More Invoice Factoring FAQs
- What Is Debt Factoring In Business?
- Debt & Debtor Factoring Definition In Business
- What Are The Costs Of Factoring? How Much Does Factoring Cost?
- Factoring vs Leasing
- Factoring vs Invoice Financing
- Are Factoring Fees Tax Deductible?
- How Can Factoring Help A Business?
- Is Factoring A Loan?
- Is Factoring Considered Debt?
- Is Factoring Invoices A Good Idea?