Factoring- It could be for you.

As I write this the most almighty storm is raging overhead. The internet is intermittant and the sky is very dark. It could be an analogy for your business. However, if you have a ledger of invoices then you may be able to release the funds help up in those for instant cash flow. Read the following and contact me if you need any further assistance in this area, or you would like to talk to someone about how factoring may help you.

Factoring

Factoring: Is it for your business?

Factoring can be a great way for some companies to raise finance and shift borrowing off of their balance sheet. It is an alternative but similar to invoice discounting. It has its pro’s and con’s. If you are closing one business and maybe looking to pre-pack the solution into a liquidation or an administration, then we will be able to finance your wishes.

Advantages:
It is among the quickest way to get advance cash. - Overhead charges get automatically reduced with the cut in invoice processing activities.

Getting cash with factoring helps in eliminating the risks of bad debts as these can be insured against.

The business owner becomes free of various other obligations connected with the invoice processing like depositing cheques and entering payments.

The task of debt collection is undertaken by the factoring company and so it helps the company by releasing time for it to concentrate on value added activities.

It gives an opportunity to offer credit terms to customers without hindering cash flow.

Factoring brings no extra liability in balance sheet and hence does not result in creating hassles while obtaining other types of financing.

Early payment discount is another benefit of factoring. Payment of bills before the scheduled time brings in many benefits in the form of discounts.

It is an easy way to have an access to unlimited capital as with an increase in sale more money becomes immediately available to business owners.

Some other benefits include building credit, quick and easy process, concentration on marketing and securing new accounts and no long-term obligation.

Disadvantages:
The biggest disadvantage is it makes the process complicated as it acts as an extra link in the process. However we have good links with a number of companies and can advise at the outset whether or not we can your deal away.

It is useful for companies with disputes and queries to hold up payment which may result in claw backs.

The ambit for borrowing gets narrowed, as account receivables will not be available for security. Many banks often require this to be available for them to add onto other borrowing.

Factors may want to get your customers examined and may have influence over your ways of doing business. This is usually the case where there are few customers of high value.

In case the customers do not repay the money, you have to pay their amount entwined in factoring. It can lead to the inability to draw down full amounts each month.

It is costlier than other sources of finance though it is competitively priced.

Few customers don’t want to deal with a third party and are not interested in factoring.