web statswebsite tracking software Factoring Benefits for Small Businesses

Over 17 Years in Business

Recent Transactions

£100,000

To Small Van Courier providing deliveries in Ireland.

£250,000

To Small fashion importer and exporter

Cash flow challenges are for many small businesses a part of their day trading experience. This could apply especially to the various sized outlets, which do not have the advantage of sufficient financial capital to support operating costs.

Factoring is a service designed to provide cash flow to businesses, without the need for them to increases their debt with additional loans. Various types of businesses are affected, not only by the fluctuating economic conditions, but by seasonal buying patterns, or extended or late payments from customers. This may include those who are heavily dependent on holiday periods or even the climate to generate turnover and resultant cash flow. These are the typical financial situations in which receivables factoring is able to provide the solution.

Paying the wages of staff is a primary concern, especially for the small businesses with retail outlets, together with the need of updating stock and the usual trading expenses, including rent and services. The ambition of most business owners is to have the necessary capital investment and opportunity to improve and develop their business. This would never be achieved without the finance to purchase inventory, and having the cash resources, to take advantage of any negotiated discounts for prompt payment.

The factoring alternative is especially advantageous to owners who are just starting their business operations, without the benefits of a credit history. It could also prove beneficial, to any owner who has a negative financial record. For any business, particularly in the retail sector, that requires a quick and regular cash flow, bank loans are not generally a favoured option. This is usually due to the delays incurred, by reason of the long and various processes involved.

Fortunately for owners of small businesses, there is the alternative of a regular cash flow without banking assistance through, or a loan. It is the method of factoring, which turns your unpaid receivables into immediate cash. There are various benefits to a business owner, primarily the availability of a determined cash flow. This is provided by the facility of business invoices, being turned into immediate cash. A further advantage is shown by the capacity to grow a business and take advantage of any new and profitable opportunities.

Invoice Discounting Rates Starting at 1.59% to 3.5%

  • No monthly requirements.
  • No financials needed.
  • No setup fees

Even though your specific business could have a healthy growth rate, as you expand, greater emphasis is placed on ensuring prompt payment of outstanding invoices, to maintain momentum. The benefits of converting receivables into a regular cash flow as, provided by factoring, ensure a sustained and controlled financial foundation. The retail industry is highly competitive, especially in the tight economic conditions of today. Therefore, it is essential that any business related to the retail trade, is able to continue meeting the ever changing demands of its customers. The prevention of expansion due to cash flow restrictions could severely limit the ability for a business to compete in attracting of customers and directly impact on the bottom line.

Factoring companies offer businesses of all types and sizes, a solution to the inherent problem of payment for work completed, but the cash flow reward for it is not usable. It is also a means of eliminating the need for increasing staff, for collecting outstanding invoices. Particularly for a small business, with limited resources in their workforce as well as financially, is highly advantageous and cost effective. Although the engaged factoring company will require a percentage of the outstanding accounts collected by them, this is compensated for by various benefits. Not needing to incur any or additional overdraft, or loan facilities, savings in added staff, or time of present personnel. In addition and perhaps most importantly, there’s almost immediate access to your outstanding cash and the opportunity of making it work for you, with added profit for the business.

Factoring companies base their proposals on the credit records of your customers and the viability of enlisting their services could depend on the number of accounts you have outstanding, as well as the quality of your customer's payment records. If you are a small business with a significant outstanding accounts receivable base, then you would probably discover that the related comparative costing could be justified. Like any other business decision, it is a question of knowing your business and your customers and then working out the numbers!

You could begin by assessing the cost of a regular loan facility, taking into account the likelihood of your paying the maximum each month. In this instance, it is probably wise to be conservative regarding the time needed for you to discharge fully the loan amount. Once you have your facts and figures structured, research the various factoring companies that meet your specific type of small business requirements. Once you have all the information before you, all aspects can be considered and an assessment made on the advantages to you.

Invoice Discounting Rates Starting at 1.59% to 3.5%

  • No monthly requirements.
  • No financials needed.
  • No setup fees