Frequently asked questions
our success is our quality, professionalism and experienceWe like to simplify things which is why our processes are easy to follow and straight forward. Even so, we always have a specialist at hand to guide you through the process. The most commonly asked questions are answered below but if you need any more information just contact us 0845 6434 611.
It is an arrangement between a Factoring company and a business whereby the Factoring company provides between 75% and 100% cash available against the unpaid invoices of a business. It also relieves the burden of routine tasks such as sales ledger management, credit control and credit checking.
Factoring can create immediate extra working capital, by advancing cash either the same or the following day against invoices. It also allows the client to concentrate on sales and production functions as the Factoring company takes care of the credit control process.
If your business has inappropriate or inadequate financial facilities, a rapidly growing order book or suffers from late payment from debtors, Factoring could meet your cashflow requirements.
Both facilities provide immediate cash against invoices. Invoice discounting is generally a confidential facility where the client continues to run its own sales ledger. An Invoice finance facility provides a full sales ledger and credit control service.
Invoice finance clients can protect themselves against bad debts with a non-recourse Factoring arrangement. The Factoring company will cover the client for bad debt losses up to an agreed limit for each customer. With recourse Factoring any bad debt is the responsibility of the client. Naturally there is an additional cost to the client for non-recourse Factoring.
Yes. Factoring can be used for a wide range of businesses offering goods or services on credit terms. However, some types of businesses such as those involved in stage payments or long-term contracts, as in the building industry, are sometimes unsuitable for Factoring.
Factoring companies will require a minimum turnover but there is usually no upper limit. Start up businesses will be considered if they have a satisfactory business plan.
Generally an Factoring agreement between the client and the Factoring company covering purchase of debts by the Factoring company, possibly in addition to personal guarantees/performance warranties is all that will be required. Occasionally a debenture over book debts or guarantees from associate/parent companies will be necessary.
Yes. Factoring company may not disturb an existing banking relationship. However, it is likely that any existing overdraft facility will be reduced on the commencement of a Factoring relationship but the reduction will be more than compensated by the additional cash made available against invoices by the Factoring company.
While the Factoring company will be in direct contact with your customers, they may welcome your continued involvement in the collection process. In addition, an Factoring facility enables the client to enter into additional sales contracts with far more confidence.
Daily transactions are advised on paper and some Factoring company's provide a direct computer link between the Factoring company and the client who can view their own sales ledger movements as they happen. Any disputes are also notified to clients immediately.
Yes. The Factoring company can collect your export debt whether they are invoiced in sterling or local currency. Most Factoring companies, often use Factoring companies in the country of import, they have the ability to collect the debt in the local language of the debtor and understand the collection process and legal system for collecting debts. An additional charge is normally applicable on export debts.
Provides immediate working capital, helps to solve cashflow problems, provides headroom for growth and frees up valuable management time to enable a business to maximise its full potential and enhances ownership value.
Yes. Well over 80.