Factoring and Invoice Discounting

Factoring and Invoice Discounting are excellent alternatives to an overdraft and give you an immediate cash injection against the value of outstanding invoices, then an advance of generally up to 90% (up to 100% in some cases!) of the value of an invoice as it is raised is provided by the factoring or invoice discounting company. The balance, less fees payable to the factoring or invoice discounting company, becomes available when the customer pays the invoice. Unpaid invoices become assets - the factoring or invoice discounting companies recognise this - and turn those assets into cash. With Factoring and Invoice Discounting more funds are available to you immediately as your business grows.

Both factoring and invoice discounting are well suited to companies who have to pay staff and suppliers weekly but only get paid by customers after 30/ 60/ 90 days. You can then get all the benefits associated with improved cash flow such as early settlement discounts, bulk buying discounts and healthier supplier relations – simply by using factoring or invoice discounting.

• The flexible nature of factoring and invoice discounting means you can borrow more as turnover increases without having to renegotiate. You can use as much or as little as you like with factoring and invoice discounting.
• If you’re turnover is over £50k and up to £50m you can take advantage of the factoring or invoice discounting type of funding regardless of high customer concentration, with the added comfort of no minimum term (only 30 days notice), so you really have nothing to lose with factoring and invoice discounting!
• Factoring and Invoice Discounting is suitable for a wide range of industries including haulage, recruitment, manufacturers, distributors, service providers, engineering, export, franchises and some construction. Your debtor book will form the basis of the agreement, so the healthier your customers the better. If you industry is not mentioned here please get in touch as we can arrange a factoring or invoice discounting facility for you.
• Whether you are a start-up, Phoenix/ Turnaround (including Pre-Packs), MBI/ MBO, acquisition, funding growth or other, Positive Commercial Finance can give you a decision in a matter of days and help chose the correct factor company or invoice discounting company for you.

A Factoring or Invoice Discounting facility will also give you access to add-on products such as Asset finance, Stock finance, Property finance, Trade finance, Payroll finance and other structured finance options to consolidate funding needs. Some of these products are not stand alone and can only be used with a factoring or invoice discounting facility.

Factoring
With Factoring up to 90% (up to 100% in some cases!) of an invoice value is paid to you as soon as it’s raised. The credit control function is undertaken by the lender in a factoring facility. This basically boosts working capital and outsources credit control, saving management time and leaving you to focus on running your business. This is why factoring is ideal for many businesses.

Remember that the factoring company or lender is as interested in keeping your customers happy as you are, so they are very professional, diplomatic and effective in what they do, often getting money in 2 weeks faster than some industry standards. Detailed accounts of transactions are available to you from the factoring company. If required you can maintain some element of control via close interaction with the credit control team – all this can be arranged with the factoring company.

Invoice Discounting
With Invoice Discounting u p to 90% (up to 100% in some cases!) of an invoice value is paid to you as soon as it’s raised and sent to the invoice discounting provider (generally by an electronic system). With Invoice Discounting the credit control function remains with you, the client. This immediately boosts working capital whilst maintaining confidentiality – you clients will not know you are using an invoice discounting company. You need to have a sound credit control function in place to be able to take advantage of invoice discounting – if you do not then factoring is the option for you.

Factoring and Invoice Discounting Benefits

Any business that offers credit can benefit from Factoring or Invoice Discounting services. You get paid immediately by the factoring or invoice discounting provider or lender as opposed to waiting 30/ 60/ 90 days allowing you to replenish/ buy stocks etc quicker. Factoring helps use the services to save on a credit control function whereas others use them to raise funds.

Factoring and Invoice Discounting Costs

Invoice Discounting or Factoring fees are made up of the cost of the money borrowed, which is generally charged at a small percentage over base, plus a service charge as low as 0.1% (for Invoice Discounting) and 0.5% (for Factoring), depending on your specific needs. Advance rates for factoring and invoice discounting are flexible and can even go up to 100% in some cases.

Factoring and Invoice Discounting FAQs

Will Factoring or Invoice Discounting upset my customers? A factoring or invoice discounting company needs to be you happy and your customers happy. A factoring or invoice discounting company will work with you and not against you.

How much will factoring or invoice discounting cost? Give us a call and we will get you a quote from 3 different factoring or invoice discounting companies. We know the best factoring or invoice discounting providers for your industry.

Will I have to change my bank accounts with a factoring or invoice discounting facility? No you do not have to change your bank accounts with a factoring or invoice discounting facility.

How long will it take a factoring and invoice discounting facility to be set up? A factoring or invoice discounting facility can be set up within 2 working days.

What will my customers think if I use factoring or invoice discounting? If you use a confidential invoice discounting facility you customers will never know. Factoring itself is becoming more and more common and is preferred to an overdraft by many.

If you have any more questions regarding factoring or invoice discounting please feel free to give us a call now!

Case Studies – Factoring and Invoice Discounting

Distribution Company – Invoice Discounting
A distribution company in Boston was given an Invoice Discounting facility with a limit of £2.5m. The debtor book included contra’s and export sales and was highly concentrated as one customer made up 60% of the sales ledger. An overpayment facility was agreed from day one and the company grew steadily.

Paper Shredding Business - Factoring
Unimpressed by his banks rates, a Paper Shredding business was provided with a facility which would free up over £25k locked in unpaid invoices. Without the resources to chase these overdue invoices, the company found themselves in need of a solution to provide a steady flow of cash. The business removed themselves from credit control process altogether by outsourcing the credit control function to the lender. Turnover is expected to double as a result.

Sports Retail- Factoring
A sports retail business who imported niche, in-demand goods generated an impressive profit in the first 6 months trading. After interest from some of the leading high street retailers, a more flexible and long term alternative to an overdraft facility was required. A large, confirmed order came in from one such retailer but the business was unable to fund the purchase of stocks to fulfil the order. A facility was provided which released money tied up in confirmed orders, allowing an up-front payment for the stock required. In addition, 80% of the value of outstanding invoices was released, providing an immediate and on-going supply of finance.

Please fill out the enquiry form to get a quick quote on factoring or invoice discounting.

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