Lets compare and contrast Invoice Factoring vs Invoice Financing for a business.
Both Factoring and Invoice Financing can be referring to the same thing. However its important to know the different types of Invoice Finance and Factoring available. Depending on your business, there may be more than one option available to you.
What Is Invoice Financing?
Invoice Finance is a type of commercial finance used by businesses to raise cash from their unpaid customer invoices. This could be on a one off basis or an ongoing “revolving” facility with the Bank.
Banks and other alternative lenders will take a charge over a businesses customer invoice(s) and make the cash available. This type of business finance is suitable for businesses that trade B2B and give their clients credit terms.
It can be used by new start up businesses and long established companies.
Factoring & Other Types Of Invoice Financing
Factoring is a type of Invoice Finance predominantly used by smaller SME’s to release capital tied up in unpaid invoices. However there are other types of Invoice Finance such as:
The different facility types will be suitable for different businesses. Important factors include sector, turnover, number of years trading, in house credit control function, clients and credit risk.
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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?
- How Do Factoring Companies Recover Funds?
- Is Factoring A Loan?
- Is Factoring Considered Debt?
- Is Factoring Invoices A Good Idea?