Cash is King For any company big or small cash flow is the life blood to the sucess or failure of company. You probably know of many companies that have failed because of bad debts or invoices not being paid on time. Whilst your Sales Ledger may look healthy its no good until you recieve the money into your bank account. This is where Invoice Factoring & Discounting can help.

What is Factoring?

Invoice Factoring and discounting works as follows: The invoice factoring company fully manages your sales ledger and provides you with credit control and collection services of all your outstanding debts. The invoices you issue upon a sale are sent to the Invoice Factoring Company who typically advances up to 90% of the invoice amount to you. The balance, less a management charge, is paid when the customer makes payment directly to the factoring company. The service is disclosed to your customer who typically receives a letter from the Invoice Discounting, or attached note to your invoice, containing payment instructions to your invoice factoring and discounting company.Who is eligible for factoring?

There are typically two costs involved: a service charge expressed as a percentage of sales factored and an interest charge for the cash advances. The service charge, covering sales ledger management, collections services and, if you wish, bad debt protection can be typically 0.25% - 3% of turnover. The main considerations in determining the service charge are your annual turnover, number of invoices and number of customers. The interest charges calculated on the daily usage of funds is typically comparable to normal secured bank overdraft rates.

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