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Invoice Factoring

Invoice factoring is a form of finance where a business sells it’s invoices to a factoring company. In return for this a factoring lender will advance up to 90% of the gross invoice value to the business. This cash is a valuable source of working capital for many businesses.

Invoice factoring facilities also allow businesses to outsource their credit control function as the invoice factoring company will send out month end statements, letters chasing outstanding invoices and phone calls to debtors to obtain prompt payment. The level of service can vary from different factoring companies and a cheap factoring service will typically be a ’low touch’ service with only automated letters and statements rather than pro-active phone calls.

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Invoice factoring is typically a disclosed type of finance. This means that a business’s customers are aware that an invoice factoring company is involved. That said some providers do offer a confidential invoice factoring service.

Invoice Factoring Criteria

While the criteria of each invoice factoring company differs along with their capabilities the basic criteria for invoice factoring are:

  • A business selling to other businesses.
  • Invoices should be raised in arrears of services or products being delivered.
  • Invoices should be raised on credit terms.
  • There should be an audit trail to prove that the service or product has been delivered.

Invoice Factoring Benefits

The benefits of invoice factoring can include the following if set up properly:

  • Invoice factoring can release up to 90% of the gross value of your sales ledger and ongoing invoices.
  • Invoice factoring allows a business to outsource the credit control function.

Why not try our free online invoice factoring and invoice discounting quote form? In three easy steps you we can help fund you the right invoice finance solution for you and your business.

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