Invoice Factoring: Turn Your Unpaid Invoices Into Cash Within 24 Hours

Do you own or run an expanding business? Are you looking for capital to realise your potential or ease pressure on cashflow?

The biggest asset of most businesses is outstanding invoices. But they are virtually useless until you receive payment for them. Using an invoice factoring service you can start using the cash nearly as soon as the invoice is raised.

Like many UK businesses you could find that Invoice Factoring offers a real alternative to traditional bank finance.

How does invoice factoring work?

Invoice Factoring is a fast and flexible way to release money from your sales ledger which would normally take 1-3 months to be paid.

When a sales invoice is issued a copy is sent to the finance provider. The finance provider pays the business up to 90% of the invoice value with 24 or 48 hours depending upon the facility. The remaining balance is paid to the business, less the finance charges, once the debt has been collected.

The management of your sales ledger is transferred to the invoice factoring provider who will contact your customers for payment and chase unpaid invoices in line with your existing systems. This can be a huge benefit for smaller businesses who have fewer resources and need to spend more time running the business and generating revenue.

Is your business suitable for invoice factoring?

Factoring is only suitable for businesses that offer goods or services on credit terms. By advancing up to 90% against invoices, factoring can bridge the gap between issuing an invoice and getting it paid. Such as facility can be a massive benefit to an expanding business by ensuring reliable working capital and predictable cashflow.

How can your business benefit?

Factoring can benefit a business in many ways, one of which is as a source of finance to aid expansion by releasing working capital tied-up in trade debtors. As well as providing cash in advance of customer payment it can also ensure that invoices are paid faster further improving cashflow.

Another major benefit is the reduction in sales ledger administration costs allowing key staff to drive the development and profitability of the business.

As factoring becomes more widespread, it is proving a refreshing alternative to traditional bank overdrafts without the need for lending reviews as borrowing limits are met or exceeded. Instead, funding is expressed as a percentage of outstanding invoices so additional finance is automatically made available as more invoices are raised.

Used correctly, Invoice Factoring can be a real asset to your business helping it to grow and prosper with minimal fuss or interference from finance companies.

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Increase Cash Flow With Invoice Factoring

Invoice factoring is one of the quickest, easiest ways for business owners to increase their cash flow. If your business produces invoices, then invoice factoring is an option for you.

The process of invoice factoring works in just a few simple steps. When an invoice is created, you sell it to the ?factor? at a discounted rate ? usually about 3 to 5 percent off of the invoice total. Factoring means you do not have to wait for the customer to pay to start collecting money from the invoice.

First you, the business owner, notify the factor that the invoice has been created. Usually this can be done electronically. You provide the customer?s contact information to the factor, and the factor will confirm the invoice with your customer.

Typically, invoices are confirmed with a simple letter or phone call. Usually the factor appears to your customer to be a billing processor or department, confirming the invoice on your behalf. This way, the customer does not realize you have sold your invoice to a third party.

Some invoice factoring companies are willing to remain completely invisible to your customers. And after you have established a relationship with your factor, and they are more familiar with your business and your customer base, they will likely stop confirming every single invoice.

After the invoice has been confirmed, the factor pays your business what is known as the ?advance rate.? This is a percentage of the invoice total, typically around 70 to 85 percent.

The factor then collects the total amount of the invoice from your customer. They keep their 3 to 5 percent, and forward the rest of the total to you.


Invoices factoring increases your business? working capitol and helps improve the credit rating of your business. And, when factoring your invoices, you are in control. You decide which invoices to factor and which ones to collect yourself, based on your relationship with your customer base.

Have you just recently started up your business? Are you finding it difficult to build enough working capitol to run your business day to day? Invoice factoring can work as a bridge to get you over the rough waters after start-up until your business is able to run smoothly.

And, if your business has poor or no credit history, invoice factoring is an option to consider if loans or liens won?t work for you, or if you consider them too risky.

A steady, reliable cash flow is necessary for any business to operate smoothly. Worrying about your cash flow also causes business owners more stress than almost any other aspect of their business. Invoice factoring allows you to stop worrying. It is the simple, fast way to increase cash flow now.

Robert Michael is a writer for MZ Factoring which is an excellent place to find factoring links, resources and articles. For more information go to: http://www.mzfactoring.com"

Credit Card Factoring

Credit policy refers to the combination of decisions pertaining to variables such as credit standards, credit terms and collection. Credit standards constitute the various criteria on the basis of which the customers, to whom credit is to be granted, are evaluated by the firm. Credit terms contain the terms and conditions of extending the credit facility. They include, duration of credit, terms of payment, delivery schedule, discounts etc. Collection efforts comprise the steps taken by the firm in order to collect the book debts from the customers.

There are different types of credit policies being followed by factoring companies. A firm may either follow a tight credit policy or a liberal credit policy. A firm is said to be following a tight credit policy where it sells on credit on a highly selective basis only to those customers with proven credit-worthiness and are financially strong. A firm following a liberal credit policy sells on credit to customers on liberal terms and standards. Credit is granted even for longer periods to those customers whose credit-worthiness and financial soundness are well known.

A tight credit policy means rejection or refusal of certain types of accounts whose credit-worthiness is doubtful. This results in loss of sales and consequently loss of revenues. When the firm loosens its credit policy, two types of administration costs are incurred viz., the cost of credit investigation and supervision and the collection costs. An immediate consequence of liberal credit policy is the accumulation of bad debts, where the firm is unable to collect the debts. This happens because the firm tends to sell even to such customers with relatively less credit standing. In modern days, the credit policy is used as an effective marketing tool capable of boosting the sales volume of the firm. This may be used to maintain the market share, especially in a declining market. Credit policy helps to retain old customers and create new customers by luring them away from competitors.

Factoring provides detailed information on factoring, credit card factoring, loan factoring, invoice factoring and more. Factoring is affliated with Invoice Factoring Discounting

Factoring Invoices - Accounts Receivables - Invoice Factoring Company

Factoring, invoice factoring, or accounts receivable financing means selling your company's invoices at a discount to a finance company for immediate capital. Factoring makes it possible for your company to utilize funds that otherwise would not be available during a normal billing cycle.

In other words, invoice factoring or selling of an accounts receivable invoice to a "factor" helps your business obtain the cash flow it needs. Prior to that there are a few key points to be emphasized:

* Elimination of bad debt: A non-recourse factor presupposes the risk of bad debt, thus eliminating this expense from the business' income statement.

* Invoice processing: In invoice factoring, "factors" usually handle a majority of the work associated with processing invoices. This includes posting invoices, depositing checks, producing regular computer reports and entering payments.

* Unrestrained capital: Invoice factoring is the only source of financing that grows with your sales. This means that as sales increase, additional money becomes instantly available. In this way, your business constantly grows and is also able to meet increasing demand.

* Advantage of timely payment: In your business transaction you can save 2 - 5% of your raw materials cost since you have the money to pay within ten days. In addition to volume purchasing, you can considerably lessen the true cost of factoring.

* Avoid early payment discounts to your clients: Since you are receiving your money without delay, you do not have to offer early payment discounts. Factoring will save you every dollar in discounts that your clients are currently taking.

* Don't give up equity: Invoice factoring ensures that you do not have to give up any equity in the company or take on any partners with factoring.

* Don't invite any additional debt: People have a misconception that factoring is a loan. This is not true; invoice factoring is not a loan. Therefore, your business will not incur any additional debt.

In invoice factoring, the first transaction usually takes 3 to 5 days. Once the account has been set up, cash can be advanced toward your invoices to your bank. People mistakenly believe that there are monthly obligations with invoice factoring. As factoring is not a loan there is no debt repayment. Moreover, you are in control of how much you factor and when, depending on your personal cash flow needs.

If you are looking for an invoice factoring company that will help your company grow, then Magnolia is there for you. For more information on factoring, factoring invoice discounting, invoice factoring company and receivable management, please visit www.magfinancial.com.

Scott Stevens is well known author who writes about financial services such as cash flow programs, account receivables, factor receivable etc. Find more information about magnolia financial service at www.magfinancial.com