The truth about factoring
The truth about factoring is that it is NOT a scary way to finance your business’ cash flow that you may have heard it was. Unfortunately, invoice factoring has a bad reputation dating back from the early 1980’s but modern factoring is a world away from that. Gone are the days of being tied into very long, and difficult, contracts with expensive costs. Invoice factoring is now a recognised tool that small-medium businesses can use to manage their cash flow, grow their business, and outsource their credit control.
The truth about factoring is, it’s a wise choice for growing businesses.
- Factoring is ideal for small-medium businesses selling to other businesses on credit terms.
- Factoring provides access to cash without the business having to sell inventory or other assets.
- Factoring is a far more flexible option than traditional borrowing- providing finance that grows as you do.
- You don’t have to provide additional personal collateral for factoring, which is often required when you take out loans from banks and other financial institutions.
- Application process and sanction for factoring with Partnership is quicker than the Bank- typically a facility is agreed within 48 hours with the first drawdown of cash to you shortly after.
- Factoring is an efficient and flexible way of borrowing money
Factoring gives you access to the value of invoices before they are paid-typically within 48 hours of raising them and whilst most businesses have their whole turnover funded, you can elect to choose which invoices your business would like to factor. The financier then provides the funding and manages every aspect of your credit control saving you time and money.
Factoring has evolved and isn’t the beast it once was
In the past factoring was used as a last resort source finance for businesses who were struggling or had a bad credit score and couldn’t secure finance from more traditional lenders. Today factoring is a completely different beast! Growing companies can use it to effectively manage cash flow and outsource credit control to a professional company which in turn frees you up to focus on the future and growth of your business.
When a business enters a factoring arrangement, whilst the funder is responsible for collecting payments from your customers themselves, they do not have any say in who you work with or which projects you take on. You still make all the critical business decisions and remain in full control of your business
Factoring to finance growth
The truth about factoring is that you do not have to be struggling for finance before considering invoice finance as a tool for growth. If your business is growing and you want to take advantage of this, then invoice factoring could be your solution to getting access to cash before your customer invoices are paid. By helping to bridge the gap until invoices are paid the resulting cash now in the business can be used to drive growth, negotiate discounts with suppliers for prompt payment or take advantage of stock purchases to meet jumps in demand. Any growing business depends on maintaining a stable, strong cash flow and invoice factoring is the perfect solution to keep your business finances in the black and maintain growth.
The truth is, factoring is not only easy to understand but also great for businesses who need access to their invoices to maintain cash flow. If you would like to find out more about how invoice factoring can help your business, then please contact us for more information. We will be happy to help you with any questions or queries you may have.
If you would like to know more please contact us.