Invoice discounting is now used extensively by new and growing businesses to provide working capital.
What is Invoice Discounting?
In simple terms, invoice discounting or factoring is a loan secured against your sales invoices.
Each time you raise an invoice for finished goods or services you can draw a cash advance to finance the day to day running of your business.
Let’s say that you invoice £50,000 of finished goods each month and your customers take 90 days to pay.
The sum owed to you as accounts receivable would stand at £150,000 at the end of the period.
By using Invoice Discounting you could draw up to £45,000 each month, providing you with £135,000 of additional cash to pay your suppliers and meet the overheads of your business.
Who handles the Credit Control?
The size and complexity of your business will usually determine who has responsibility for credit control. If your business operates its own accounting system and has an effective credit control function then it could be left to you.
For other businesses, a fully outsourced credit control function is provided to ensure that your invoices are paid on time.
Who is responsible for Bad Debts?
As part of the set up process we would carry out a credit review to assess the risks associated with offering credit to your customers.
Bad debt protection policies can be taken out to cover prolonged default and customer insolvency.
What if my Customers are Abroad?
Invoice Discounting can be provided if your customers are located abroad:
Is Invoice Discounting Suitable for my Business?
Invoice discounting is now used by most growing businesses:
- Transport & Logistics
- Security Guards
- Care Homes
- Body Shops
- Resellers & Distributors
More help available now
Contact us today for an informal discussion or complete the following contact form and we will call you.