What is the difference between Invoice Factoring and Invoice Discounting?
Both types of facility enable a business to release cash early from funds tied up in both existing and ongoing sales ledger balances. There are, however, some key differences:- Invoice Factoring This type of facility is generally disclosed (but see Confidential Factoring below) – meaning that the factor’s involvement is shown on each invoice issued […]
Why use an Invoice Finance Broker?
There are several reasons to use a broker to help you to select the best invoice finance product for your business:- The question should be “Why not use an Invoice Finance Broker?”
Is Spot Factoring more expensive than Factoring?
In short, Spot Factoring (the factoring of one / a selection of invoices) is relatively more expensive than a whole turnover facility. In other words, on an invoice-by invoice basis, you would expect to pay a higher amount to just fund one invoice. Much depends on the overall funding requirement before a decision can be […]
Disapproved Debt
It is important that any business which uses invoice finance to fund growth obtains the highest possible prepayment against invoices that it can. However, sometimes the focus when selecting an invoice finance partner can be too much on the prepayment number – for instance “I have / am being offered 90% prepayment”. All too often, […]
Factoring Selective Customers
We are often asked if it is possible to factor only one or several of a company’s customers, rather than the whole ledger. One reason for this may be that some customers pay very quickly and the benefit of factoring is not as great as for slower-paying customers. The short answer is: Yes! However, many […]
How will my customers react to Invoice Factoring?
Many businesses are concerned that their customers may react negatively if they decide to factor. On the flip side, it could be argued that obtaining a finance facility with a funder should be seen as a positive due to the funder’s confidence in extending the facility. Negative views date back to when factoring was seen […]
Minimum Monthly Fees
Why do invoice finance companies usually insist on a minimum monthly Service Fee? The reason is because invoice finance companies need to get a return on their investment. Service Fee is related to the level of turnover (including VAT if applicable) which is passed through the facility. In simple terms, the higher the turnover, the […]
Construction Finance
Construction Finance is provided by a handful invoice finance companies in the UK. It releases funding either against uncertified applications for payment, staged invoices or invoices for fully completed work. Businesses that can benefit from this type of facility are either contractors or sub-contractors in the construction industry. Such a facility will help to improve […]
Third-party Credit Protection Policies
Most invoice finance companies will provide their own credit protection cover at a premium of sales turnover (usually between 0.4% and 1.2% of gross protected turnover).It is possible to obtain third party cover which most invoice finance companies would be happy to provide funding against. The invoice finance company would normally take a formal charge […]
Switching Invoice Finance Provider
The choice of an invoice finance partner can be time consuming and usually involves a decision between several lenders as to which is the best company to suit your needs. However, as time progresses, it is sometimes appropriate to look for a more suitable invoice finance company, for example:- Costs are considered high and another […]
