Factoring and Invoice Discounting improves your cash flow within your company. You are able to draw down typically between 75% and 90% of the face value of your invoices immediately, instead of waiting thirty, sixty or even ninety days to get paid. The balance is paid to you, less charges, once your debtor has paid the invoice.
With the additional cash flow that invoice finance generates, it enables you to grow your business knowing that you have sufficient working capital to support the growth.
Both are designed to provide additional working capital to new and expanding companies by advancing up to 90% of the value of your invoices upfront, with the balance less charges being paid to you once your debtor has paid.
Most importantly, you can draw money against those invoices outstanding on the day your invoice finance facility commences, as well as on the future invoices which you raise. This gives you an injection of cash immediately, with the benefit of enhanced cash flow thereafter as you continue to raise your sales invoices.
There are many kinds of factoring and invoice discounting facilities available, which we will be happy to discuss in more detail with you. These include options with and without credit protection against bad debts, confidential facilities where no-one knows you are using invoice finance, export factoring and many others.
The procedure is simple. You continue running your business as normal. When you raise invoices the following takes place:
You send your invoice to your client.
At the same time you will need to send a copy of the invoice or your sales daybook listing to your invoice finance company. Many can receive this copy electronically.
The factor will then make available up to 90% of the value of the invoice, of which you can choose to draw as little or as much as you need.
Depending on whether you are factoring or invoice discounting, either you or your factoring company will collect the money from your debtor.
Once your debtor has paid, the balance less charges will be available for you to draw down as required.
Factoring is where the factoring company would not only make the money available to you, but will also run your sales ledger and manage the credit control function on your behalf. This is ideal for businesses where time is critical, and outsourcing the collections to a professional third party frees you up to focus on business development.
Invoice discounting is where the money is made available to you from your invoices, however you would continue to collect the money from the debtors yourself. More often than not, this service is on a confidential basis, where none of your customers know that you are utilising this type of finance. This particularly works well for businesses with established credit control procedures in place.
Everything we do is covered by our no-quibbles guarantee, so you can invest in our services with confidence. If you're not happy that you've benefitted, we'll be pleased to refund your investment in full.