Invoice Factoring Online: Factoring

Factoring at a glance
The following four steps are an over view to factoring, to learn more about factoring click here:

1. Your business raises an invoice and sends a copy to your factoring company
   
2. The factorer then advances you a % of the gross invoice value, the percentage is usually around 85%.
   
3. Your factoring company will then send out statements and collect the cash previously invoiced.
   
4. The factoring company will then pay you the rest of the balance, minus charges.
   

Factoring is designed to help you release money tied up within your company. The largest asset a company has is typically their unpaid invoices. By using a factoring service you can release up to 85% of the gross balance invoiced for. This will then allow you to put the money straight back into your business without waiting for overdue invoices etc.

An added benefit of using a factoring service is that the factorer can also help you with the management and collection of invoices, for a small business with low head count this can prove to be more cost effective than hiring someone.

Factoring overview
Factoring is selling the interest in your receivables or invoices to a financial institution at a small discount. This service has many different names including: invoice factoring; receivables factoring and/or invoice discounting (which is actually slightly different from factoring).

The industry, although largely unknown, is quite large (over £20 billion of turnover was factored last year) and is an old financial service that has long been used by multi-billion pound corporations and has more recently been made available to small and medium sized businesses.

Factoring allows many SMEs to take advantage of their largest asset, namely their outstanding invoices, to help obtain financing. Many new and growing companies have trouble obtaining traditional bank financing due to the length of time in business, profitability or financial strength. But by factoring, they are able to raise cash from approved invoices in as little as 24 hours. Other types of financing generally require two years in business and a profit.

How can Invoice Factoring Online Help?
Invoice Factoring Online are one of the UK's leading factoring and invoice discounting intermediaries. Over the past 12 months we have helped companies factor over £170 million worth of invoices, firmly establishing ourselves as a market leader.

Through our extensive panel of factoring and invoice discounting providers we are able to offer some of the best rates and services in the market.

Click here to get a factoring quote