Factoring & Invoice Discounting - Factoring Services
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Get FREE Quotes - For UK Invoice Discounting
Services
Factoring is when a factoring company purchases your accounts receivables at a discount for instant cash, payment is then collected from your customers and a commision is taken, usually 5-20%
- Immediate cash. You can receive your cash 48 hours after purchasing an invoice.
- Credit management & Debt Collection services . Professional collection services can be carried out by a competent factor they will set the necessary credit limit for each outstanding invoice, this saves you time and can also reduce your credit costs.
- Foreign receivables factoring (Export Factoring). Sales to customers overseas , including invoices in foreign currencies other than sterling, can also be included in a factoring agreement.
- Non-recourse purchase of outstanding invoices . To reduce your risk a factoring company will assume the credit risk of the invoices purchased.
- Term of Contract and termination clauses. A typical contract with a factoring company runs 12 months or more. After the initial term, contracts can be terminated - there are no set rules, read carefully (varies from notice periods to contract anniversary). Termination is always subject to full repayment of the funds.
- Trial period. Some factoring companies have a trial period when you begin using their services: "if you don't like it", you can end the contract after the first few months. Termination is always subject to full repayment of the funds.
- Reputation and references. The factoring company will be a critical interface with your customers. Make no compromises. Work with a reputable firm to eliminate all risk of negatively influencing your customer relationship. Ask for references. Check if the factoring company is a member of the Factors and Discounters Association.
- Personalized service. Particularly if you are a small company, make sure to have a customer service team available for you.
- Exports factoring capability. If you export make sure the factor has its own network, or affiliate partners, in your customer's country to provide on the spot collection.
- Bad debt protection. Some factoring companies offer this additional service, some don't. Ask!
- Chose the factoring company according to your customer profile. Whether your customers are other businesses, or individuals is an important criteria in choosing your factoring company.
- Transfer restrictions of your outstanding invoices. Make sure there are no existing contractual arrangements disallowing the transfer of your outstanding invoices to a factoring company. For example a loan that is secured by your outstanding invoices.
- Information requirements to open an account with a factor. The factoring company will ask you to fill in an application form and provide additional documents and accounting statements you would also typically give to your your bank when taking out a loan. Be prepared to give a detailed overview of your customers, and if you request bad debt protection, their risk profile.
Competitive terms . Rates charged are usually between 70% and 95% of invoice amount.
- Notification and Non-Notification Factoring Services
- Collection Factoring
- Non-Notification Factoring
- Export Factoring
- Reverse Factoring
Other Factoring Services
- Recourse factoring
- non-recourse factoring
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