Cost vs benefits
As with all things in business, it’s vital that you don’t just look at the cost of a factoring facility but also consider the value that it brings to your business.
Particularly when you compare two products and fee structures side by side, it’s important not only to focus on the charges as, often, the benefits of one may far outweigh the other.
Here are just five of the overall benefits factoring can bring to your business:
Improved cash flow
By advancing up to 90% of an invoice’s value within 24 hours, factoring provides fast access to working capital ahead of being paid by your customers. This money can then be used for a variety of purposes including to meet day-to-day commitments, take on new orders or invest in new machinery.
Factoring can be great for businesses in times of both growth and uncertainty because facilities grow in line with the business. Whilst traditionally many businesses turned to bank loans, these do not offer the same flexibility as invoice factoring and can therefore restrict growth.
Regain time and resource to focus on your core business
With the option to include a dedicated sales ledger management service, factoring can reduce in-house overheads and improve your credit control performance. This allows you to regain time and resource to focus on your core business rather than chasing payments.
Factoring companies can also credit check your potential customers. This information improves your chances of trading with those who are likely to pay on time. As well as this, credit protection can be incorporated into the facility to safeguard your business against bad debts.
Better position for growth
By gaining access to cash ahead of being paid by your customers you will be in a better position to capitalise on new opportunities as and when they arise, as you’ll have the necessary funds to fulfil the order without worrying about cash flow.