Costs & Benefits of Invoice Factoring

Thousands of B2B businesses are turning to invoice factoring, but why?

The benefits of invoice factoring

  1. Get paid faster.  No more waiting for customer payments before you can make your next move. Whether it’s investing in marketing, purchasing assets or hiring staff to meet demand, faster payments mean you can focus on your future today.
  2. Focus on the big picture.  Outsourcing the management of your sales ledger means you can stop chasing payments giving you more time to focus on the bigger picture. Time spent chasing invoices and money lost in administration costs are a thing of the past.
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  4. Make the most of today’s opportunities.  Goodbye to the dark days of turning away large orders or investment opportunities because you don’t have the funds to fulfil them.
  5. Bring in the experts.  Your factoring provider will have invaluable expertise in collecting money, meaning faster payments for you and a professional, efficient service for your customers that will only enhance your company’s image. Some will perform credit checks on potential customers enabling you to avoid customers with histories of non-payment.
  6. Increase profits. Access to larger sums of cash enables you to make early, bulk purchases that often include volume discounts and mean you can invest in product development, service delivery or recruitment that brings in profit.
  7. Reduce stress.  Any business owner will appreciate the significance of these words.  With a reliable influx of funds each month you will be able to meet your obligations, maintain your good credit rating and sleep a little sounder at night.  If your provider offers a non-recourse option or ‘bad debt protection’ you will be protected from the risk of customers who fail to make their payments.
  8. No bank loans.  Invoice factoring delivers a greater level of flexibility as it grows in line with your turnover. It’s also not classed as a debt so doesn’t factor as a liability on your books.  Your factoring contract can be up and running in a matter of days which is next to nothing when you compare it to the weeks or months it can take to complete a bank loan application.  Invoice factoring companies, unlike many banks, won’t ask you to justify what you’re going to spend your money on. There is a relatively low risk associated with invoice factoring as the funds have been given on the basis of existing contracts or work completed.

You are handing over the management of your sales ledger and credit control to a third party. Their conduct, good or bad, will reflect on your company. In addition, your customers will be aware that you are working with a factoring company and not handling their payment directly.

If this isn’t suitable for your business, you may want to consider invoice discounting which provides the same service but you retain control of your sales ledger and chase your own invoices.

We strongly recommend comparing multiple quotes to make sure you’re getting the best deal. We can arrange free, no obligation, quotes from the UK’s most trusted invoice finance providers. Complete the form below and we’ll be in contact within 1 business day.

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