Invoice Discounting and Factoring
Invoice Discounting and Factoring explained:
Mention “Factoring” or “Invoice Discounting” and many business owners may well raise an eyebrow.
The thought of selling their sales invoices to raise cash to inject into the business fills them with doubt and apprehension. It still sometimes has the stigma of being “last resort” lending.
But is this stigma fair? Are the common misconceptions about factoring and invoice discounting still rife even with today’s economic backdrop? Unfortunately yes, and yes. They are still common and they are still misconceptions!
Many businesses are still concerned that these entirely relevant forms of raising funds may give the wrong impression about the state of their business. They worry people will assume they’re in trouble.
Yet many business owners and operators know how hard it is to get funding at the moment & should be re-assured that banks/funders simply wouldn’t lend to businesses on the brink of failure. They lend to those they believe in and whose strategy for the business is positive and viable – not to lame ducks!
Another common fear is that customers may not want to trade with you if they see the business factoring its debts. In reality the message it sends is that you are well funded, have the confidence and support of a financial institution that sees hundreds if not thousands of businesses, thus demonstrating that you are ready for growth.
However, many providers recognise this fear and an increasing number offer a confidential service, giving the impression that all the communications are from you, but still providing excellent credit control support.
Also worth noting is the range of businesses that factoring / invoice discounting companies can support where traditional banks are actively trying to move away from difficult sectors such as service providers and the construction industry.
The key with both options is the flexibility for the facility to grow as your business grows. It may be hard enough to get any form of traditional lending such as a loan or overdraft, but try going back asking for more every six months as your business expands and needs more cash, and you will find it an increasingly difficult task.
Not only could it be very hard to get, but they may well demand some form of personal security or charge on property, whereas the only security the factoring or invoice discounting company needs is on the sales invoices themselves. It’s like having invoices that are cash on delivery!
Call us on 01752 227966 today to find out more
Invoice Discounting and Factoring
We can help you with:
Ongoing reporting requirements such as providing management information or monitoring covenant levels, as well as monitoring the markets to monitor spot re-brokering opportunities
Driving through the application and credit approval stages to get as many forms of funding for you to consider from our panel of funders
Building a proposition to take to one or more lenders, including supporting documents such as business plans and the financial forecasts etc
Managing the process from enquiry stage right through to the final draw down of funds
Initial research into the market place and the options available to you
Contact us to discuss how Invoice Discounting & Factoring could improve your cashflow.
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About Us
As commercial finance brokers, Balance for Business Limited is a member of the National Association of Commercial Finance Brokers who are authorised & regulated by the Financial Conduct Authority.
Whilst we are not a principal lender, we source funds for our clients from an extensive panel of banks and other financial institutions to ensure you get the most appropriate deal.
