Invoice factoring is one of the simplest ways that has probably come to breach the gap that had existed for too long. Unlike conventional loans, factoring companies are very simple in the manner in which they operate; there is not much paper work and requests for audited financial accounts before you are given the money. There are several advantages of using factoring companies UK as compared to the process of borrowing a loan from a traditional bank.
First and foremost the process involved in invoice factoring is very quick and simple. The only thing required of a small business is to sell its products and services and then produce and invoice on that particular customer. The invoice is then sent to an invoice factoring company which will in turn verify it and offer funding of up to 85% of the value of that particular invoice. And mark you the entire process last for less than 24 hours and you are ready to expand your business.
The other major advantage of using factoring companies UK is that as a business you do not need to go around collecting debts. The invoice factoring company does debt collection for you although at a small fee which cannot be compared with the time and money you would have spent doing the same. In addition, the business can use the time that would have been used chasing debtors in more productive areas. Since all invoices are sent to the factoring agency, it’s up to them to follow up and ensure that they have paid. This also means that your business or company will not necessarily have rely on its cash flow to pay creditors and get 2% discount which they are entitled to if they make payments in ten days. In addition, investor confidence will increase because of improved cash flow.
Last but not least, factoring companies UK are advantageous because just in case you made an agreement with non-recourse terms, there is no cause for worry about the whether the invoices will be paid or turn into bad debts.
In conclusion, there are just so many benefits or advantages of using invoice factoring companies to finance your small or medium business enterprise. As much as you can access such funds from conventional banks, the process and requirements involved in factoring companies are very friendly. In addition, they also help you in debt collection besides increasing the cash flow of your business.