Release up to 100% of your invoice value instantly
Improve Cash Flow
Improve cash flow and mitigate fluctuations in demand
Maintain control of your sales ledger
Protect your business
Protect against late or non-payment of invocies
How can you benefit?
If you provide goods and services to other companies on credit terms either in the UK or overseas and have a minimum turnover of £100,000, invoice factoring is an ideal solution for your organisation. Invoice factoring releases cash from your invoices immediately and saves time and resources when it comes to managing outstanding invoices.
It’s a great solution for small businesses that don’t operate an in-house finance team especially if you have customers who pay late. If you export your goods and services overseas, then you may be considered for finance against these sales and this can be combined with bad debt protection.
Who are InspiredFactoring?
We are experts in the price comparison industry and have in-depth knowledge of the invoice factoring market. Our independent experts work closely with the UK’s top suppliers. We source the entire market to find a credible lender that perfectly meets your requirements and maximises your savings. We guarantee customer satisfaction.
The InspiredSuppliers Approach
What you need to know about invoice factoring and invoice discounting
Invoice factoring and discounting companies offer cost-effective and flexible facilities that frees up capital and thereby improve cash flow.
Invoice factoring and invoice discounting are forms of finance that allow businesses to generate funds by selling their debts, in the form of unpaid sales invoices to a third party finance provider. Although a loan for your business can provide a lump sum for investment and business overdrafts can help bridge short term financial gaps, invoice factoring provides a steady and reliable cash flow that suits the needs of most businesses.
You present your invoice to the factoring company and they will pay approximately 85% of the value of the invoice directly into your bank account and usually within 24 hours, but it could be up to 100% with some factoring companies. Your chosen factoring company will then collect payment from your client, on your behalf, saving the time and resource to chase the outstanding payments. Once the invoice has been settled by the client, the finance provider will pay the balance to you, less the pre-agreed interest and fees.
Tens of thousands of UK based companies use factoring and invoice discounting which can be a crucial facility for startups or new businesses who can experience cash flow fluctuations and shortages in the early stages of their business.
Invoice factoring Fees
Factoring is suitable for all business types, but how much you can borrow depends on your turnover and the value of the invoices you raise. Charges vary, but typically you will pay up to 3% over the Bank of England base rate for the money you have borrowed using your sales ledger as security, together with a service charge of around 1% linked to gross turnover. InspiredFactoring is constantly comparing the market and putting you in touch with lenders that offer the best deals.
Some invoice finance providers offer bad-debt protection, otherwise known as “non-recourse factoring” whereby if a credit-approved client defaults on an undisputed debt, the factoring provider will credit you with the value of the debt up to an agreed credit limit. You will be charged a premium for this facility in the region of 0.5%.
A cheaper solution to traditional invoice factoring is confidential invoice discounting that provides funding against the value of UK and export invoices but you manage credit control and client relationships. It is an ideal facility for well-established businesses with strong balance sheets and costs less than invoice factoring.
Questions you should ask an invoice factoring or invoice discounting provider
- What is their application procedure and what will be required of your business?
- What fees will they charge for the service and remember to ask about interest rates for sums loaned as well as management fees.
- How much money can be leveraged against your sales ledger?
- How will the invoice factoring company maintain a good relationship with your clients?
- What is their track record for collecting debts quickly and efficiently – do they have a robust credit control procedure
- Is the factoring or discounting company experienced in your market sector?
- What period of notice do you need to give the invoice factoring company?
If you consider the benefits and the drawbacks carefully and seek professional advice, invoice factoring and discounting can increase your working capital and bridge the gap between raising and settlement of an invoice so that your business enjoys a consistent cashflow.