Compare Invoice Factoring Quotes and get the best deal on the market.
Are you looking to Compare Invoice Factoring Quotes for your business? A ‘factor’ will lend against your unpaid invoices – allowing you to leverage cash that is tied up in moneys owed. Typically, a business can receive 85 – 90% of an invoice. Invoice Factoring can protect a company from the late payment of invoices and save the time required to chase them. It is especially useful for companies that offer credit to their clients. Here we’ll discuss about compare invoice factoring quotes.
The Process of Invoice Factoring
When your business generates an invoice, you can issue it with instructions to pay the factor directly. A copy will also be sent to the factor, who makes an agreed percentage available to your business almost immediately. The factor will then issue statements to the customer on behalf of your company. It is the factor who will collect the money from the customer. The customer will pay the factor 100% of the invoice, and they will then forward the balance to you.
Who is Eligible for Invoice Factoring Services
Factoring only covers B2B (Business 2 Business) transactions. Each factor will have their own set of conditions that determine whether a business is eligible, so the requirements for obtaining a factoring service will vary. Specifically, qualification may depend on the company’s turnover, and requirements will vary from industry to industry. Some factors specialise in different businesses, such as the building industry, real estate or recruitment.
However, there are some general similarities across all sectors.
- Your company’s credit rating will probably determine what percentage of the invoice you can receive.
- You will have to give evidence that your company has UK registration.
- Factors will request financial details about your business, such as turnover.
Pros and Cons of Invoice Factoring?
Every company has some months that are better than others, but invoice factoring can generate immediate income to stabilise cash flow. It is most often used to fund expansion of rapidly growing businesses and provide the flexibility to plug a shortfall. A loan involves taking a longer-term risk on the future performance of your business, but invoice factoring is being paid early for work that is already happening. Invoice factoring is still directly tied to the productivity of your business, so it grows with you and does not involve loan renegotiation.
Because the factor collects the money owed, it has the added advantage of reducing the administrative part of the process for your own company. Some UK Business use factoring simply to reduce admin costs on the credit control side of the business. This is due to the Invoice Factoring provided using their over credit collections departments to chase outstanding invoices.
Best way to Compare Invoice Factoring Quotes.
All Invoice Factoring costs to businesses differ, so usually a quick chat can ensure a better idea of costs once we get an idea of your business.
Knowing that a factor is involved sometimes prompts clients to pay in a more timely manner. The factor themselves will usually pay within 24 – 48 hours of accepting an invoice.
However, because the factor contacts the customer directly, this is also a potential risk. That said, it is usual to agree a protocol for contacting your clients with the factor beforehand.
- Sometimes factors can refuse an invoice, so clear planning is essential.
- The service is not free and there can be hidden charges.
- Ending a factoring agreement usually involves some kind of notice period.
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