Issuing invoices has it's downsides for a business such as generally having to wait for payment. Your business could have secured a lucrative contract, undertaken all the work, but still have a long wait to receive payment for the goods or services you have supplied.
This can sometimes put your company in a difficult financial position. You might have bills to pay, your own suppliers to pay, or you might just need the cash to grow the business.
Factoring can be a solution for your businesses cash flow problems such as the ones described above.
What actually is Factoring?
Factoring is finance based on the value of the invoices you have issued to your customers. A Factoring company can often lend up to 90% of the value of your invoices.
Factoring is more flexible than other forms of finance because as your business grows and your sales increase, you can borrow more.
You also don't have to secure your loan against any other assets, which can give your business more flexibility.
How can Factoring benefit your business?
- Allows you to know when you are going to paid instead of having the uncertainty
- Lets you inject cash into your business quicker in line with you sales
- Receive up to 90% of the value of your invoices within 24 hours
- Factoring is well priced compare to other business loans
- The Factoring company can manage your debts making less work for your business in terms of debt management
Raising invoice finance for a business can also be carried out through Invoice Discounting. This is a similar method to Factoring, however it allows a business to keep control of it's debt management.
If you are looking for a cost effective flexible way to raise money for your growing business Factoring should be strongly considered.
Lloyds TSB Commercial Finance are Factoring market leaders in the UK. Lloyds Factoring services are designed for businesses with a turnover of over £100,000 and provide funding for invoices of usually up to 120 days. |
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