Benefits

1) Improves cash flow

Factoring increases your cash flow by giving you access to funds almost immediately - within 24 hours, as opposed to the 60 days or longer that it could take to receive payment from the client directly. With a factoring service, cash can be made available to you within 24 hours of sending the factoring company your invoices.

As you will get paid earlier, you could reduce your capital base requirements and take advantage of early payment discounts to suppliers and increase profit margins.  You may also be able to increase sales by offering customers extended credit terms.

2) Reduce the time you spend on credit control

Slow paying debtors can be a major drain on a company's resources. The factoring company will take responsibility of your sales ledger, recovering debt and outstanding invoices, issuing statements and following up with chasing phone calls and letters. This will free up time to concentrate on your core business. The factoring company will allow you some input and flexibility on how this is done, ensuring goodwill is maintained with your customers, whilst still collecting the money in an efficient manner. They provide a professional service that treats your customers as if they were our own.

3) A more responsive alternative to business overdrafts and loans

Factoring is the only method of funding that reacts instantaneously to both increasing and decreasing sales alike. Once the factoring facility is in place, there is no limit to the amount you can borrow as the level of finance is directly linked to the level of sales. Factoring does not have a credit limit like a bank loan. The more you sell, the higher your credit line becomes. It’s more than likely that overdrafts, loans and mortgages would cost you more time and money than a factoring facility.

4) Business credit rating is not an issue

With factoring a business credit rating is not an issue, you may qualify for factoring even if you are a young company. Unlike a bank, a factoring company is less concerned with evidence of a firm's financial track record, as all lending is linked directly to sales.