Uk Commercial Mortgages

Factoring

Another way of raising finance for your business is to use factoring services.

The UK Small Business Federation recently recently recognised the fact that late invoice payments can severely affect business growth plans and acknowledged that they can cause many first year business failures (January 2007).

If you experience problems with late invoice payments which in turn affects your business cash flow, you can 'factor' your invoices, which are sometimes called debts, to overcome this problem.

How does factoring work?

  • a factoring firm pays your business a large amount of the debt you are owed, in return for collecting debts from your debtors
  • the factoring firm chases the debt owed from each debtor and keeps the remaining amount.

This type of finance is ideal for small to medium enterprises (SMEs), where outstanding invoices are often the biggest assets. Additionally, many SMEs can be limited by insufficient staffing and inadequate IT systems to efficiently chase debtor money.

Key benefits of factoring

Factoring can give:

  • increased working capital
  • additional sales ledger management help
  • finance for capital hungry projects
  • money for acquisitions
  • finance for rapid business growth and
  • larger loans than traditional bank overdrafts.

Find out more by accessing our invoice factoring specialist services.