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.
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
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
3) A more responsive alternative to business overdrafts and
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. Itís 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.