If having read this article you think factoring is right for you, why not talk to one of the team at Bibby Financial Services? Contact Us or call them direct on 08.īibby are one of the UK’s largest independent funders and have been supporting SMEs through their factoring facilities for over 40 years.8 Frequently Asked Questions About Our Factoring Services Look for a factoring organisation that has expertise in your industry, one that understands the challenges and opportunities of keeping cash flowing so that you can invest in growing your business. Some companies will pay per invoice - others will batch up these payments and you’ll receive a lump sum.įactoring is a great option for businesses looking for a way to access monies owed fast, without adding to their debt profile. Most factoring organisations pay in two instalments: the first payment anything from 80 to 95 percent of the value of the invoice the second payment the remainder less the agreed fees. Make sure you’re clear on how you will receive your monies – some use bank transfers, others use wire transfers which can be faster. From there, they make an offer to you which you can agree to or not.Īssuming you agree to their terms, you’re ready to get started. Once you contact a factoring company, they’ll generally arrange a meeting or a phone call and ask for specific documents and information about you and the business. Do they have positive customer reviews?.How knowledgeable are their people on your industry sector?.How often do they keep in touch with you?.Will you have a dedicated point of contact?.How global they are if you do business abroad – what offices are available overseas?.Make sure you understand the added value available to you. Sometimes going for the cheapest factoring organisation is not in your best interest. Not all factoring companies are the same. Many factoring companies help keep you on track with your payments using online platforms – check that out when you first enquire.The factoring company pays you the remainder of the invoice, less their percentage.The factor receives payment of the invoice within the designated time period – 30-120 days.You receive 80 to 95 percent of the value of the invoice within 24 hours.You issue your invoice to your customer and send the factor a copy.The terms of business are agreed between you and the factoring organisation.The remainder of the invoice, less the factor’s fee, is paid as soon as the invoice is paid by the customer. When you’ve agreed terms between you and the factoring company, you can typically receive between 80 to 95 percent of the invoice up front, within 24 hours of the invoice being issued. Factoring providers work much faster, often making decisions within days of you approaching them with the information and documents they need.Ī factoring organisation tends to work this way. Renegotiating bank finance can take longer to arrange, meaning you might have to miss opportunities while you wait for decisions to be made. The great thing is that as your business grows, and you increase the number of invoices issued, so the amount of accessible cash grows, meaning you can continue to pay for business expenses, new assets and pay wages, without needing to renegotiate terms with the factoring company. What does factoring involve?Ī factoring service pays you an agreed percentage of your invoice while they wait to be paid by your customer. Not all factoring providers offer the same terms, or the same services.

It’s important to read the small print when you apply. You can access factoring services if your customers are creditworthy and you meet the specific criteria of the particular factoring provider.

This avenue is not always available to you through traditional bank funding. For example, you can be considered for invoice factoring services if you’re a new business with relatively little financial history, an organisation seeking cash to fund expansion, or you might need access to cash faster to pay employees and your suppliers.Įven if there’s a bankruptcy in the background, a factoring service will still consider your application if you can demonstrate creditworthy customers and a sound business strategy. So how does it work? Invoice factoring can be beneficial to businesses operating in a wide variety of circumstances. Rather than wait for your customers to pay (anything from 30 - 120 days depending on the payment terms) you can access your funds usually within 24 hours of issuing your invoices. Invoice Factoring is a way of ensuring you’re paid early, rather than just on time, every time you invoice.

Factoring invoices for dummies