How can your business benefit from invoice factoring?

The biggest problem for many businesses is maintaining a healthy cash flow. Problems with this could stem from clients not paying for their services or buyers delaying in making purchases. Issues like this can leave you stressed out, worried about when your next payment will be coming in – or if it comes in at all!

There is a clever solution to solve your cash flow problems: invoice factoring. Here’s how it can help:

What is invoice factoring?

This is essentially a process that allows you to receive a percentage of the funds once a bill has been issued. Depending on who you have taken out invoice factoring with, you could be given 85-90% of the total value immediately. Once the client or customer has paid the bill, the rest of the sum will be paid out to you, minus the small fee taken by the invoicing company. This means that you will no longer have to wait on tenterhooks for your businesses next arrival of income.

What are the benefits?

Invoice factoring carries many benefits, and while most of them are financial there are many advantages that are very important in business. Here are the top reasons for using invoice factoring for your company:

•    Don’t have to worry about cashflow again, as it gives you a steady supply of capital you can rely on.
•    Collection and chasing of payments is left to professionals, leaving you free to run your business.
•    It can work to increase your profitability as you no longer supply a service to clients without receiving payment.
•    Plan your finances easier as you will be able to know exactly when a payment is coming in.
•    Protect your company from getting into debt as the result of customers leaving you out of pocket.

All these advantages can help your company to grow and expand at a much faster rate, giving you the money you need to hire new employees and make vital purchases. While there is a fixed fee from the company supplying the invoice factoring you will benef from having a steady cash flow that you can be certain will arrive.

If you are a small business that doesn’t have a specific credit control department then taking on invoice factoring can completely over take the administrative roles involved. This can also allow you to maintain good customer relations as you don’t have to deal with the awkward payment conversations yourself.

Do you find that your company is constantly using bank overdrafts? By taking out invoice factoring this can be avoided, raising working capital in a convenient and positive way. It can also help you to avoid plummeting into a lot of debt over unpaid bills and clients who drop out without reimbursing you for your services. In the current economy this may be one of the most important decisions you can make to keep your business going under as the result of cash flow problems.

If you want to discuss invoice factoring for your business, give us a call.

 

Article By Ben Lloyd

September 3rd, 2013

Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.

Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.

Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.

Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.

See more articles by Ben

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