Factoring

What is "Factoring"?
Many businesses, especially new and small businesses, have cash flow problems, and find it financially difficult to wait for their customers to pay them for goods sold, delivered, or services rendered. They frequently have trouble securing traditional bank financing factoring is that alternative. Factors don't operate under the same restrictions, not being bound by the same regulations, which allows them to be more flexible in their credit granting standards and take greater risks. Factoring is that alternative.

The company is selling its receivables, which is an asset, and not borrowing against them, so they are not creating debt. It is a type of revolving credit in that funds supplied are short-term since invoices are usually paid within 90 days. Factoring your receivables provides your company with a way to have the cash it needs today rather than waiting weeks to receive payment from your client. Money provided by factoring your receivables can be used for things such as pay creditors, pay payrolls, pay taxes, and take discounts on merchandise purchases. The money is cash without borrowing. Funds are available immediately upon presentation of invoices and documentation.

Factoring provides positive "Cash Flow", which is the lifeblood of all businesses. The high cost of management time for effective credit control can be a real disadvantage to any business and with customers taking longer to pay, a business could be starved of cash to pay staff, overheads and suppliers.

At "Pathfinder" we provide friendly and impartial advice and introduce you to a Factoring Company we believe best meets your requirements. We look at your needs independently of the service providers to assess which of the varied range of products offered by factoring companies are suitable to your business and which factoring company would provide the most appropriate service for you.

Please remember that factoring companies are service providers, they provide your business financial services, which are intended to allow your business to grow and prosper. The factoring company purchases the company's invoiced debts and immediately pays the business normally up to 85% of the value of each outstanding debtor. Copies of all sales invoices and credit notes are transmitted as they are raised. The remaining monies become due either when the client pays or on an agreed "maturity" date. As the "invoice" is assigned to the factor company, the customer pays the monies directly to that company.

The benefits to a business are finance for growth; Improved Cash flow and Credit control; better terms with suppliers with improved working capital. Even a company/business with a poor credit history or insufficient collateral can obtain working capital through factoring its book debts.