Invoice Factoring Finance

Invoice factoring finance is one of the most straight forward and effective aids to solving cash flow management problems yet despite this, amazingly, only 20% of businesses that qualify take advantage of it.

Debt factoring is a form of invoice finance and just one of the many solutions Eland Business Services Limited can offer you to help relieve the pressure on company banking facilities, salaries and tax demands. You could draw-down money owing using factoring finance within 48 hours and if you build in a non-recourse option you may never even have to worry about bad debts either.

What is invoice factoring?

Invoice factoring finance is a business to business service which works in a broadly similar way to invoice discounting in that both revolve around delivering the cash from debts on goods sold on trade accounts or credit straight away.

Invoice finance is one of the oldest methods of borrowing against receivables although it is not technically borrowing in the true sense of the word. The factor buys the invoice receivable out right. This means factoring services can be arranged where responsibility for collecting the payment from the customer always lies with the factor and if you choose a non-recourse option this would even apply if your customer defaults on payment. Invoice factoring is not a confidential service and the finance company will be dealing directly with your customers.

How it works

When you invoice your customer you sell the invoice to the factoring services company who advance an agreed portion of the cash, usually somewhere between 70% and 90% of the gross value. The responsibility for collecting payment from the customer then lies with the factoring company. Once they receive payment they will give you the balance of the amount, minus administration or service charges.

Why it works

Here are eight reasons to consider factoring invoices to raise finance against your sales ledger:-

1. Debt factoring allows you to have payment for your invoices straight away. That means cash flow can be managed more easily.
2. Cash can be drawn down without your credit rating being taken into account, although you need to compare service and interest charges with traditional banking facilities to make sure you are getting the best deal.
3. It helps you manage company cash flows and even manage your risk if required. With the cash from your trade debts up front you have the freedom to make payments on regular bills such as tax, salaries or rent and confidence if unexpected bills occur.
4. Invoice factoring lets you to free up time and resources. With your factor taking care of your company's sales ledger and credit control, you and your staff can spend all that freed up time more productively, running your business or winning new customers.
5. Invoice Finance is competitively priced and can save you costs on overheads. Not only are debtor finance solutions a quick, flexible and efficient way to access your cash but they are relatively inexpensive. The price becomes even more attractive if you aren't spending time managing payment collection, yourself.
6. A good factoring services will shorten the payment cycle by making sure your customers pay their invoices on time.
7. Debt factoring is a flexible finance option that grows with your sales; theres no need to keep negotiating increased borrowing facilities.
8. Factoring invoices can reduce your stress levels. Without payment worries from debtors, you can concentrate on business.

Manage your cash flow with invoice factoring

The cost of invoice finance can be tailored to your business circumstances so if you decide against utilising some, or all, of the factor's sales ledger management services then that option is available. Why would you though? When you can use all that freed up time to concentrate on the things you do best; running your business, winning new customers and growing your company though increased sales.

Here at Eland Business Services, we will make it our business to guide you comprehensively through the whole process, helping you to determine if factoring finance would be right for you. We can advise you on the terms you should expect to pay for the arena in which your business operates and save you time and money by sourcing a suitable provider for you.

News Update

Invoice factoring of public sector debt is now permitted without prior consent! That's great news for company's that previously felt they were unable to trade in this lucrative sector due to financial constraints.