Am I Qualified for either Factoring or Invoice Disocunting?
“Am I qualified for invoice financing?”, this is the most typical question we need to answer most of the time. Invoice finance can either be within the form of factoring or invoice discounting. The question isn’t a easy question like “How do I qualify for an overdraft?”, but towards the greatest of my information, I will attempt explaining, which businesses have the best opportunity of being able to benefit from this type of funding and from which business this really is greatest utilized.
Your business can be eligible so long as it is still a operating business or perhaps a starting company along with the forecast of 100,000 pounds really worth of sales within the close to future.
You must be trading with other companies (called Business to Business or B2B) and offering them credit terms. It does not matter in the event you trade direct with the customer you just won’t have the ability to get finance (or element) against these outstanding invoices. Nevertheless, the revenue from these sales will be of assist.
You’ll need to present that your debt is provable. This indicates need good sales contracts, have the ability to evidence the goods / services have been provided (i.e signed timesheets, delivery notes etc.).
A wide client base is much more preferrable. This is not to say if you have only one big client that factoring isn’t for you personally, just that you get a lot better options and flexibility by getting a bigger client base.
If you’ve had previous credit problems don’t let this put you off investigating invoice finance. So long as your customers are credit worthy and you have great systems you will find funders available. A cash flow plan is also required to be able to make probably the most out of the funding which you will get from factoring. i.e. is paying suppliers ahead of time and get discounts much better than paying VAT or tax.Regardless of what it is, once structured according the benefits will often outweigh the costs, but in order for it to efficient careful planning has to become involved.
Here is a list of sectors that are most suited to using a factoring or invoice discounting facility: • Recruitment • Supply of labour (i.e. security guards, drivers) • Printing • Haulage / Couriers • Manufacturing • Wholesaling • IT (Consultancy and hardware supply) • Pharmacies • Importing & Exporting • Plant Hire • B2B services Other sectors where you will find some specialist funders can assist are: • Construction • Scaffolding • Bodyshops • IT (contractual service and maintenance)
Factoring should be considered especially if you are doing business with other businesses and you require a constant flow of cash in order to keep your business operational. Get hold of us as soon as possible if you have any queries.
We work together with our customers to be able to create a funding package that will cater to their needs.
