What is Invoice Factoring (IF) and how does it work?
Invoice Factoring is a financial solution that typically provides up to 90% of the value of your outstanding invoices as cash. However with IF the lender takes control of the company’s sales ledger, chasing customers for settlement of invoices and managing the credit control of the business. The lender is also responsible for processing the remittance advice payments, meaning that your customers are fully aware of your business contract with a factoring company.
There can be several benefits in operating an IF facility including:
- A fast injection of cash
- Flexibility of funding
- The potential to offer extended terms of credit to larger clients
- More flexible cash flow
- Opportunity to increase facility as the business grows
With an IF facility your company receives the cash it requires quickly, usually by the next working day.
So who can benefit from Invoice Factoring?
A typical company who can benefit from utilising an IF facility would be one who has:
- Turnover in excess of £50,000
- Trading business to business
- Offering goods or service on credit
- Current bank funding / overdraft does not provide the flexibility to grow the business
This product is available for the majority of B2B sectors with Cranfield able to source funding for the more challenging sectors such as construction.
Do you know how much your financial facilities cost you? Without the facts, business decisions become a guessing game. Find out more about how we can help you with our Cash Flow Finance Health Check.
The search for the right financial solution begins & ends with Cranfield, so contact us today.