Factoring - Cash flow

2. Factoring is provided for new businesses and established businesses. Funding through Factoring is most suited to businesses with UK sales of at least £200,000 per year to commercial clients on invoice terms, with a business minimum net worth of £25,000 and demonstrated reasonable profitability with a past trading history or strong business plan.

Suitable companies are companies are selling goods or services on normal credit terms to other commercial organisations.

Factoring provides a business with funds against unpaid invoices. For example if you are a expanding business issuing funds to other commercial organisations. Once you have issued an invoice on payment terms of say 30 days the factoring company will make available to you up to 95% of the value of this invoice. The factoring company is repaid the advanced moines once your client has paid. This bridges the gap between you issuing the invoice and being paid by your customer. Allowing you funding to undertake additional work rather than wait to be paid by your customer or seek an overdraft or an extension on your existing overdraft from your bank.
In addition to the funding the factoring company normally carries out the role of credit control, casing over due invoices and issuing statements.

Benefits

* Early payments - Up to 95% of the value of your invoices.
* Additional help with credit control.
* Bad debt protection - optional.

Read about Invoice discounting