Factoring is the process of purchasing commercial accounts receivable (invoices) from a business at a discount.
Factoring includes full ledger management, leaving you with more time to run your business. Bad Debt Protection is also available (the facility is then termed “Non Recourse”), offering you peace of mind against bad debts.
Copy sales invoices are forwarded to the factoring company who will immediately advance up to 90% of the invoice value. The level of advance will depend on how the provider views your debt and debtors.
The balance of the funds, less a small service fee, is paid to you when your customer pays.
In addition to providing funding, the factoring company:-
This type of service is perfect for the smaller sales-focussed businesses who are looking to outsource back-office work. It can also remove the difficulties some business owners experience when it comes to chasing debts.
If you already have a Bad Debt Protection policy, the benefits can be assigned to the factoring company to give them comfort when funding high levels of sales ledger concentration.