At Carrera Finance we work with over 50 Invoice Finance providers throughout the UK.
Invoice Finance can be complicated, however there are two main kinds of Invoice Finance: Invoice Factoring and Invoice Discounting. With factoring, a finance company essentially manages your sales ledger and collects the money your customers owe you against outstanding invoices. You get a percentage of the total value of the invoice (often around 85 per cent) and then the remainder when the invoice is paid. In turn you pay interest – called a ‘discount charge’ and typically a service charge, based on turnover.
Invoice financing can also be structured through invoice discounting in which the borrower collects customer payments, meaning customers are unaware of the financing arrangement.
The lender will advance as much as 95 per cent of the invoice amount. The borrowing business then repays the lender as it receives the invoice payments from customers. In comparison to factoring, discounting is better suited to established companies with in-house credit collection departments and annual turnovers of at least £100,000.
Whether you go for invoice factoring versus discounting depends on your business, as well as how your customers would perceive a third party collecting their invoice payments.
The main advantage of factoring is that your business does not need to concern itself with chasing payments, so can focus on other areas.
No matter what the age and size of your business we can normally provide a workable and cost effective Factoring solution to improve the cash flow in to your business at rates often far better than overdraft terms.
Key benefits of a Factoring Solution include:
- Up to 85% of the Invoice Value paid to you on issue.
- On-line process and cash paid in to your account same day / next day.
- Facility available to new start business with turnover from just £100K per annum.
- Bad debt insurance can be included if necessary to give additional peace of mind.
- Factoring can be offered to most Business types and Industry Sectors.
- Reduced finance costs over traditional overdraft facilities.
- Easy to set up and the service can be operational within 7 – 10 working days.
For more information and to see how a Invoice Finance can benefit your business Please call us today or submit an enquiry and we will contact you.