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As our quest to become the only site you need for your accountancy and factoring needs continues with aplomb, read our guide to exactly what the concept entails.
Factoring is the provision of an immediate injection of cash against the value of outstanding invoice.
As invoices are raised, up to 85% of the value of the invoice is released within 24 hours. The remaining 15% is then paid although a small service fee is incurred once payment is received from the customer.
The business in question then has access to an ongoing supply of cash linked to sales.
Other benefits of the factoring system include:
• Management of sales ledger by chasing and collecting outstanding invoice payments from customers on businesses behalf.
• Preparation and sending out of statements, telephoning of all customers, and collection of payments.
• Maintaining dedicated accounts of transactions.
As is indicated by the name, confidential factoring is exactly the same as standard factoring but everything is confidential. Most importantly these means:
• Confidential sales ledger management service is achieved.
• Chasing and collect outstanding invoice payments in the businesses name can be performed.
• Preparation and sending out of statements that carry the businesses company logo
• Telephone all customers in company’s name
Non-recourse factoring is essentially exactly the same as Factoring but additionally:
• Added bad debt protection. This provides peace of mind that the company gets paid even in the event of a customer’s insolvency or inability to pay.
This type of factoring helps businesses to develop overseas profitability with confidence and entails:
• Immediate injection of cash against value of outstanding export invoices.
• Remove hassle of dealing with overseas customers, by chasing and collecting outstanding invoice payment from companies’ overseas customers.
• Company can decide whether to use in-house multilingual team or worldwide network of associated companies.
• Preparation and sending out statements, telephoning overseas customers in their own language.
• Smooth out problems of fluctuating exchange rates by offering multi-currency facilities.
So there you have it. The Compare Factoring comprehensive guide to the various types of factoring and all of their differences and advantages. As always, if you think we can help with any of your factoring or accountancy needs then please do not hesitate in getting in touch.
"Target Business Assist have provided our business with a new invoice factoring system that has dramatically improved our cash-flow position and flexibility with our clients..."
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