What Are the Advantages of Factoring?

Originally posted 2012-05-03 22:17:47. Republished by Blog Post Promoter

Speed – Factoring and Invoice Discounting enable you to capitalize on your invoices with a minimum of postponement. You can get as much as 90% in the invoice within just Twenty four hours, assisting to keep a good working cashflow instead of requiring one to wait 30/60 days for a customer to pay (If they pay promptly!).

This is particularly useful if you achieve a sizable order that requires you to spend on stock and production costs before you get paid; factoring enables you to take the transaction with much less risk to your cashflow.

Expense – Factoring your invoices cost less than making use of charge cards, overdrafts and many other kinds of finance. Factoring also provides you with set charges, whereas credit cards and overdrafts costs can build up if you keep using them and not paying them off in full.

Time Conserving – Rather than having to chase financial obligations, factoring usually means the invoice finance company will collect the cash themselves; saving you time and effort that you can use to profit your company in other areas.

Security – Factoring does not require one to risk your property or business assets as security for the finance, as the funds are guaranteed on the sales you have already made. Remember though that some factoring companies will not want to factor high-risk invoices; as they bring the danger rather than you.

Funding Matches Your Business – It is possible to increase the funding degree to your enterprise through factoring as the business develops and improve its sales. Getting financing that stretches while you develop is very helpful; particularly as many enterprises fail due to the fact broadening sales use up their cashflow. Ideal for Businesses in all

Sizes – One huge advantage of factoring is it is potentially suitable for companies of any size; especially now there are invoice finance firms that are directed at small enterprises and their needs.

Are There Any Disadvantages to Factoring?

Track record – There much less reputable invoice finance companies which are being too aggressive in the collection of factored invoices that it could put your partnership to your clients in the line. However, you can avoid this issue by choosing a well-known and reputable firm.

Management – Factoring lessens the control you’ve got over your debts, as the invoice finance organization gathers them for you. Even so, this also indicates much less work on your part.

Factoring has a lot of methods to keep the business running. If you’d like to find out more about the versatile factoring service provided by The Interface Financial Group, please call us on 0800 014 8626 or visit www.ifgnetwork.co.uk now.

Originally posted 2012-01-03 01:36:46. Republished by Blog Post Promoter

In the current economic climate, everyone is looking for financial savings and for businesses, invoice finance facilities such as invoice factoring and invoice discounting can be a good source of financial savings.

The following are 6 ways in which to lessen the costs of invoice factoring or invoice discounting:

1. Altering your products – A business can create a cost saving through switching products yet depends on what service one is using whether invoice factoring or invoice discounting. Should you be currently using a factoring facility, and you have existing resource within your business that could deal with credit control, it could be that you can save money on your invoice finance costs by switching to an invoice discounting facility in which you do not receive a credit control service as part of the facility. Hence the facility may be cheaper. Alternatively, should you be currently using invoice discounting and you have existing credit control staff within your business, by switching to invoice factoring you’re going to receive a credit control service included in the facility and this may allow you to reduce your staffing cost by not employing credit control staff.

2. Switch between selective and whole turnover invoice finance – Most commonly it is on a “whole turnover” basis that most invoice factoring and invoice discounting facilities operate. Therefore all of your invoices are automatically captured with the invoice finance arrangement and the charges are likely to be determined as a percentage of the value of your invoicing. If you do not have a consistent requirement for cash within your business, for example if you are subject to seasonal trading peaks and it’s these that you require funding for, you may be better off considering a selective facility in which you only factor or discount certain invoices, hence reducing the cost of the facility overall.

3. See the Bad Debt Protection – In the event you already have bad debt protection as part of an invoice factoring or invoice discounting facility you should assess the effectiveness of that cover. The adequacy of your credit limits that are being granted through your invoice company are important and must be thought about. Take into consideration any other provisions on the arrangement such as first loss clauses which show that you are not going to be covered for the first part of any particular loss. In the event that your bad debt protection is not providing you with adequate cover, you may wish to save some money on your invoice factoring or invoice discounting costs by moving to some recourse facility (where you do receive bad debt protection).

4. Drive down the “other costs” involving invoice factoring or invoice discounting – There are numerous of other charges that may be applied by the funder. An example of this is by taking payments by CHAPS rather than BACS. A BACS transfer is usually provided without charge however, a BACS transfer will need longer to clear, and credit funds to your account, than a CHAPS transfer. If you’re able to plan ahead your cash flow requirements you may be able to switch from using to each other in order to reduce the cost associated with your facility. Its also wise to review the other costs detailed on the statement provided by your invoice finance company (normally each month). This will assist recognize the type of other charge you’re incurring and seek to drive them down. For example, if you are being charged re-factoring fees, in respect of overdue debts, it could be economical to spend some time chasing these invoices in yourself, in order to avoid paying these penalty fees.

5. See the exclusions – Most invoice finance companies have the ability to exclude certain transactions from your invoice factoring or invoice discounting facility, even if it is operated over a whole turnover basis. For example, certain types of transactions may be of no interest towards the factor so they may exclude them which can also been known as not notifying those particular transactions. When one can find parts of your company that you could manage without receiving finances against like particular clients or certain transactions, asking the invoice company may enable you to make those non-notifiable, or excluded under the terms of the facility. This may prevent you from the need to pay a fee in respect of those particular types of invoices.

6. Look around and renegotiate – There are a variety of providers of both invoice factoring and invoice discounting facilities. It is a competitive market and a new provider will often be able to quote to you better rates than your existing facility. Similarly, for those who aware of what’s available on the market, your existing provider may be prepared to negotiate your existing rates in order to retain you as a client.

When Must You Think Of Factoring?

Originally posted 2012-05-03 21:39:21. Republished by Blog Post Promoter

If cash is restricted and you do not know what else to do, you might like to consider the choice to embrace the idea of Factoring in business in order to save yourself. Utilizing this idea, you’ll be able to have advance cash flow and enhance your financial predicament and keep yourself from being forced to acquire loans from the bank.

However, what is the point of factoring?

This is actually just about the most efficient strategy for ensuring that your business won’t run across financial debt which means you could possibly get back into the market. Today’s down financial state would really call for a business to find other options rather than obtaining financial loans that may go through the roof due to rates of interest.

It sounds good but how can this concept assist you to?

You’ll be able to take the several benefits with this concept in different ways. One good thing about this process is you can obtain commercial funding and make certain that your job has got the cash to remain adrift.

Additionally, this concept can be considered to be the most effective methods for financing and ensuring that you won’t be a target to the financial conditions around it. Quite simply, you aren’t absolutely dependent on the problem of the economic climate.

The cash inflow of a business could drastically improve to maintain everything on good angles by deciding to use factoring to the lender.

Do you know the dangers involved about this idea?

To start with, the company is simply depending on accounts receivables and not on money that is not there. In this manner, you can revive yourself and make certain that the regular tasks are carried out as always, without being interrupted.

What other options are available?

Businesses can also choose to decide on small business financial loans, or use personal funds to help keep the business moving. They can also try discussing a solution with their Bank, yet this could prove challenging and it is more likely to involve offering some security against the service.

Small company factoring, has become ever more popular in the UK as it is around the world, as the worldwide economic climate is still making buying and selling difficult. Factoring is a practicable strategy to keep yourself from sinking.

If you’d like to find out more about the versatile Factoring service offered by The Interface Financial Group, please call us on 0800 014 8626 or visit www.ifgnetwork.co.uk today.

Originally posted 2012-01-06 20:08:50. Republished by Blog Post Promoter

What are your costs because of not factoring?

Look at the time value of money as well as the benefits of improved cash flow to your business. Paying your suppliers can be done through having cash within 24 hours so you could also receive better discounts too. Are you able to fulfill your next order to XYZ Company to make payroll without tapping your line of credit at the bank? Will it be possible for that you offer longer terms to larger customers and have more business? Can improved cash flow help your business grow or survive without incurring more debt in the bank? Is it feasible the your debtor factoring fees be outgrown of the improved cash flow you have benefited in your business? Sure it can, the savings alone in taking discounts from your vendors can equal the cost of Factoring. You can keep those other savings! Factoring is a smart business decision. Why aren’t you doing it?

Is cash required right away for growth or survival?

Can be your business cash flow stressed with long billing cycles? Despite increasing sales, does the control over receivables and payables seem like a juggling act? Could your business increase sales by offering better terms in your new and larger customers? Are you spending too much time collecting from slow paying customers without enough time building your business? Has your traditional financing been turned down by your bank due to years in business, profitability, lack of assets, financial strength or personal guarantees?
Have you contemplated turning away new business due to slow cash flow? These are generally challenges many businesses face that can be solved with debtor factoring.

Advantages of Debtor Factoring

Simplicity
The idea for you advance funding you’ll receive for your receivables and also discount fees you will pay is the financial strength and credit worthiness of your customers rather than your business!

You obtain Cash for your unpaid accounts receivable invoices. Most of the factoring company buys the invoice from you with an amount less than its actual face value (70-90%). Once the Factor later collects the full amount of the invoice from your client, you will receive the remainder of the advance less the factoring fee (discount rate). Fees will vary depending on the total dollar amount you intend to factor on a monthly basis.

Flexibility

Do you need a financial solution flexible enough to assist your business to be more competitive while improving supplier discounts, credit rating and cash flow? Factor as much as your want or as little as you want. You choose. No obligations. The amount you can factor are without minimums and maximums. No binding contracts, if that is what you want.

Traditional bank financing relies on your financial strength and credit history while debtor factoring bases it on your customers’. Here’s why you need to use debtor factoring services:

Offer Better Terms – Win More Business

With Factoring, you can attract more business by offering better terms on your invoices. Most businesses negotiate on price to win business in a competitive market, but with Factoring, you can negotiate with terms instead of price.

To your customers, better terms can be more pleasing than better prices.
When you use attractive terms to win business, you can build the price of factoring into your costs of products and services.

Example: A new customer may choose to do business with your company since you can offer NET 30 or NET 45 terms while your competitor (who isn’t factoring) requires payment up front but has a 3% better price. In the event you factor the subsequent invoice for much less of 3%, you have leveraged factoring services to win the business free of charge and improved your cash flow concurrently.

Improve Cash Flow* NO Additional Debt *WIN over customers

Your Business Receives:
* Get cash in 24 hours or less from your outstanding invoices! Eliminate long billing cycles.

* There isn’t any new debt created. Factoring is not a loan. This allows you to preserve your financial leverage to take on new debt.

* Improved credit rating.

* Purchase capital equipment to flourish your business.

* Increase inventory for quicker shipments or handle seasonal inventory needs.

* Promote for additional business.

* Take trade discounts. You’ll have more saving and may outgrow your factoring fees with these discounts alone!

* Pay off nagging, expensive delinquent obligations.

* End payroll worries.

* Meet tax requirements on time. Ignore penalty fees that are exhausting.

* Negotiate discount purchasing.

* Unlimited sales and profit potential.

If you’d like to receive an increase in cash flow and improve your bottom line profits, you need to use debtor factoring now!