The main advantage of factoring is the injection of working capital generated by “selling” the company’s outstanding sales invoices for instant cash with the factoring company often making an immediate payment of up to 80% to 85% of the value of all outstanding invoices with the balance being paid over once the customer has paid his account.
Unlike more traditional methods of finance the amount of funding available via factoring increases in line with sales and isn’t tied to security as with overdrafts
Factoring normally incorporates a full sales ledger management package too which can be an enormous advantage to many companies as it means that the management can devote all of their time to income generating activities safe in the knowledge that they won’t have to waste valuable man hours chasing up overdue debts.
Naturally there are disadvantages with the prime one being one of cost as factoring is invariably more expensive than a bank overdraft.
It is also not suitable for everyone as it’s only available for those companies selling on normal trade credit terms to other businesses and not for those selling to private individuals.
Some factoring companies can be fairly restrictive on credit limits as well as concentration limits if they feel that the company has too many eggs in one basket
Selecting the right factoring company isn’t as simple as it may appear as they all have operational differences as well as varying service levels but as one of the oldest established specialist factoring brokers around we know which factoring companies actually offer the service levels that they claim and which ones don’t set artificially low credit limits on customers and which ones have the highest levels of client retention and satisfaction and we refuse to deal with anyone that doesn’t match the high standards that we insist on.
There are no charges for our services and you therefore have nothing to lose but much to gain by talking to us as we only introduce people to one of the few factoring companies that actually perform
Interested in how our factoring broking services can benefit your business?
Telephone 01827 707680
or complete our contact form if out of hours and we will get back to you