- 12 Aug
Why Factoring Is Used
In my blog post yesterday, I wrote about the perception of one of the invoice finance providers that factoring is growing in popularity. To a certain extent, in recent times, the industry statistics do show a slight swing towards factoring products, as opposed to invoice discounting.
This post just explains the reasons why companies use factoring rather than other forms of invoice finance.
Why Factoring Is Used
The key difference with that factoring is that the funder also provides a credit control service to their client, in addition to the cash flow benefit of receiving prepayments against unpaid sales invoices raised to debtors on credit terms.
The credit control service means that the factor takes over collection of your outstanding sales ledger of invoices to customers. This means that they will send out paperwork such as statements and chasing letters, in addition to making telephone calls to chase up overdue accounts.
This can deliver a significant benefit for a small or medium sized business, as it can mean you don’t need to either chase invoices yourself, or employ a credit controller, saving money.
The only proviso is that not all factoring services offer equivalent credit control services. In some cases, the service is provided whereby the factor will only chase the largest accounts on your ledger, it is more of a risk control mechanism then the delivery of a service for the benefit of the client. In other cases, the factor will provide a fully comprehensive invoice collection service which can realise significant cost savings for users.
These collections services can also be extended to include export debts, to customers based in foreign countries. Once again, this can relieve the headache of having to employ your own staff with foreign language skills.
- 09 Apr
How To Avoid Invoice Fraud
Working within the invoice finance arena we are always very aware of the potential for fraud. The large amounts of money that a fraudster can potentially extract from finance companies make them attractive targets. However, the measures taken by lenders, to detect and protect against fraud are highly developed. This is not necessarily true of UK businesses generally, who can also fall victim to...
- 09 Nov
Invoice Finance Facility
In the last 12 months, FundInvoice have assisted many hundreds of UK businesses with advice, and in many cases, help finding an invoice finance facility. A 25% increase on last year.REQUEST A NO OBLIGATION CALL BACKWe provide a high quality, personal service to find you the best facility for your business. Our service has resulted in us receiving glowing testimonials from satisfied clients. Our...
- 06 Nov
How We Can Help You Find Business Finance
Having reviewed of our progress over the last year, I can report that we have again managed to increase the number of companies that we have assisted by 25% from last year.REQUEST A BUSINESS FINANCE QUOTEDuring the last year we have published two new free guides:We have continued to specialise in helping customers find business finance in difficult situations, unable to find the business finance...
- 18 Oct
Invoice Finance Is Not An Alternative To Having A Viable Business
I spotted a recent article published by TheBusinessDesk.com regarding the financial woes of a direct mail business called SDM. The business has apparently failed, despite having a 100% prepayment from an invoice finance facility. The article reminded me of how vital it is to have an underlying business that is viable, for invoice finance to help.In this particular case, the article alleges that...
- 17 Oct
Close Brothers Invoice Finance
Voting has recently opened for the Business Moneyfacts Awards 2019. Close Brothers Invoice Finance, part of the FTSE 250 Close Brothers merchant bank, have been the winners of the award for the Best Factoring & invoice Discounting provider, for the last 5 consecutive years. In addition they have recently won Asset Based Lender of the Year 2018 at the Insider - Dealmakers Awards. Quite an...
- 16 Oct
Prepayments Against Invoices To NHS Trusts
I saw an article about slow and late payments from NHS Trusts in HSJ online magazine (27/09/18). The article alleges that according to data obtained under a freedom of information request, 44 out of 135 acute trusts paid less than half of their invoices on time during a period between 2017 - 2018.These slow payments may be causing a significant cash flow problem for non NHS suppliers to NHS...
- 10 Oct
Finding Prepayments Against Applications For Payment
I wanted to find out how difficult it would be for a construction sector company to find prepayment finance against applications for payment.As I have seen previously with other searches, Google delivers quite an unhelpful set of results when one searches for say "construction finance against applications for payment". This might be a typical search term used by a construction sector customer...
- 04 Oct
Can You Finance This New Startup?
Are you a lender that could help finance this new startup?CONTACT USWe are trying to raise business finance of £75K (less might still be workable) for a new startup business that is acquiring the licence to operate the business of an existing company (that will no longer trade going forwards).The existing business has operated for several years, and its future trade will be taken over by the new...
- 01 Oct
Explaining Invoice Discounting And Factoring Charges
I wanted to share this really good example of how someone not familiar with invoice discounting and factoring quotations can end up misinterpreting the quotes, when they try to make a comparison - ending up "comparing apples with oranges".GET A FUNDING QUOTEIn this particular case the prospect had two quotes, one from a provider we had found for them (the cheaper quote) and one they had sourced...
- 26 Sep
Funding Self Insure And Accident Management Company Invoices
Whilst there are several car crash repair invoice finance companies, that will handle invoices to car insurance companies, not all of them will handle "self insured" invoices, or invoices to accident management companies (third parties that deal with accidents)."Self insure" and accident management company (AMC) claims are also able to be funded, under an invoice finance arrangement, by our...
- 25 Sep
Budget For Your Invoice Finance Charges
We had an enquiry recently for funding for a small recruitment startup that was expecting to turnover a few hundred thousand pounds sterling. We provided them with a quote for factoring, prepayments against invoices and a credit control outsourcing service.The quote we initially found was for an all inclusive fee of £3,800 + VAT per annum. Which is reasonable for a whole turnover facility that...
- 20 Sep
How Many Invoice Finance Quotes Do You Need?
We had an enquiry from a prospective client who was looking for invoice finance quotes and, as is sometimes the case, they told us they hadn't been speaking to anyone else. However, once we started searching the market for them, it became apparent that they had used at least 2 other brokers already - each of whom would have contacted numerous funders. One of our funding partners had received the...
- 27 Aug
Updated Info Pack From FundInvoice
We have just updated our info pack, which is our version of a brochure outlining our services. Its in a PDF format and it details the business funding and invoice finance quote search and advice service that we offer at FundInvoice.You can download a copy of our brochure/info pack here: FundInvoice Info PackIt includes:If you would rather just speak to someone about what you need please call...
- 24 Aug
Invoice Finance Practices To Watch Out For
Whilst having a meeting with one of our funding partners, we started discussing practices that can mislead customers, that we have come across around the invoice finance industry. I thought it might be helpful to put up a list of these practices so that customers can watch out for them.I have posted before about the research we have conducted into the setting of minimum fees. Most of the whole...
- 07 Aug
The Difference Between Profits And Cash Flow - Need Help?
There is a huge difference between profits and cash flow. A business can be very profitable but still have poor cash flow - profits are no guarantee that you won't run into a cash flow problem. Even the big businesses can feel the effects of cash flow restrictions.In high level, layman's terms, profit is what you make on your sales, your profit margin. Cash flow is how the money from sales moves...
- 01 Aug
34% Average Invoice Finance Cost Saving Achieved
From time to time we check the average cost savings that we are achieving for our invoice finance customers.As at August 2018, over the previous 12 months, we have found average cost savings of 34% for our invoice finance customers seeking price reductions on quotes received from other invoice finance companies.CHECK HOW MUCH YOU COULD SAVE ON INVOICE FINANCEWe achieve these savings by being able...
- 06 Jul
Nucleus Commercial Finance Lowers Its Unsecured Business Loan Rates
Nucleus Commercial Finance has, as of yesterday, lowered its unsecured business loan rates once again.Interest rates now start from a flat rate of just 5% (for an "A band" credit risk client, with a business loan on a 3 to 12 month term).CONTACT NUCLEUS COMMERCIAL FINANCEThey are able to offer longer terms, up to 36 months, and they will deal with lower credit risk clients, but the rate will...
- 03 Jul
Hive Project Strike Deal With Gosocket Over Half Billion Of Blockchain Based Invoice Finance
It was nice to be contacted by a representative of the Hive Project to advise, prior to general release, that they have struck a huge deal with Gosocket, to establish a joint invoice financing platform, in Q3 2018, based on their blockchain invoice finance technology.They report that there are half a billion of eInvoices ready to be funded via this portal.Gosocket is a network that connects...
- 02 Jul
Free Guides Relating To Business Finance
This post sets out a number of free guides and "how to . . ." articles that relate to getting invoice finance and also leaving that type of funding.We have a number of related advice articles and guides about how to stop using invoice funding:...
- 25 Jun
Tony Lee - RAFTS Regulatory & FinTech Services
Pleased to catch up recently with Tony Lee, a colleague of mine from when I worked as a business consultant. He has just launched a new consultancy service called RAFTS (Reg & FinTech Services), which may be of interest to the financial services organisations that read this blog.If you are looking for support with any aspects of financial services, you can use the following contact form to...
- 22 Jun
Same Day Business Funding - A New Record Turnaround
We have just set a new record for the time it takes to turnaround a business finance enquiry. We arranged same day business funding for a client, with approximately 7 hours between enquiry and them receiving cash from the finance company.That's a new record turnaround for us!REQUEST A CALL TO DISCUSS FUNDINGWe were contacted in the morning by a car crash repairs coachworks business that were...
- 29 May
5 Financial Mistakes You May Have Already Made
Below is a list of five common financial mistakes, that you may have already made within your business.It is very common within a business for the prime movers to use their own money to support its cash flow. This may be in the form of a cash loan to the business, or it may be that you pay for business expenses on a personal credit card, or from your own cash savings.This may seem like a...
- 24 May
Resubscribe To FundingVoice Magazine Ahead Of GDPR
There has been a deluge of GDPR related opt in requests received recently. It might seem like every business you deal with are contacting you to ask you to confirm your marketing preferences or to opt into receiving their messages.Put very simply, GDPR (General Data Protection Regulation) is new legislation that relates to your data protection rights, and it is due to take effect from tomorrow....
- 22 May
10 Ways To Make More Money
These are 10 simple ways that you can potentially boost your company’s income, and make more money.1) Increase your prices by a fraction – if you don’t already increase your prices annually, in line with inflation, you could introduce this, or you could make a small price increase in order to cover rising cost.2) Ask your existing customers for more work – this could be in the form of...
- 30 Apr
Calculating The Cost Of Leaving Invoice Finance Or Factoring
Calculating the cost of leaving invoice finance depends upon the type of facility that you have, and the nature of the agreement that you have entered into.There are various aspects to calculating the overall cost. Firstly, there may be a termination fee. Secondly there may be additional costs that you will incur by having to undertake certain tasks yourself, that were previously undertaken by...
- 18 Apr
Factoring Advantages And Disadvantages
If you are looking at using factoring as a source of funding for your business, you may be interested to understand the pros and cons.Below I have set out the factoring advantages and disadvantages in simple terms, so that you can make an educated decision.The biggest advantage is the improvement to your company's cash flow. As you raise new invoices to your customers on credit terms, they are...
- 04 Dec
IGF Have GBP30m New Funding Line From The British Business Bank
Hot off the press, we hear that IGF (Independent Growth Finance) have a new £30 million funding line from British Business Investments, which is part of the British Business Bank.The British Business Bank, which has it's headquarters in Sheffield, is a development bank that is wholly owned by the UK Government. It was originally announced, back in September 2012, with the objective of increasing...
- 21 Nov
Business Finance For Startups
I thought I would conduct a small piece of research to find out how easy is it for a new startup to find its way to business finance brokers such as ourselves, that can help with invoice finance products.I used the situation of a company that is highly suited to using some form of cash flow funding - although they may not know the name of the product that they are looking for. The result was that...
- 29 Oct
Free Confidential Advice About Business Problems
If you are having business problems, you might feel that you would benefit from a free discussion, with an expert, in confidence. You could benefit from free advice from external parties that may be able to help.There maybe a variety of different business problems that you are experiencing, but some of the common ones may be a lack of sales, poor cash flow or potential insolvency. In each...
- 14 Oct
Debtor Backed Loan With No Trust Account
If you are looking to get out of factoring you might be interested in an option that presents a halfway house solution. This particular product offering is what could be described as a debtor backed loan.It is early days with the provider, we are in the process of agreeing terms, but is an interesting product that could be very attractive to businesses that are concerned about having funds paid...
- 12 Oct
Finance Against Fee Notes For Accountants
There is a specialist niche form of finance available to accountants who raise fee notes as they undertake work for their accountancy clients. These notes are not invoices, they are just a record of work that has been undertaken. However, funding can still be accessed against them.Finance can be provided against your "fee notes", raised to keep track of the work that you are doing for your...
- 07 Oct
Cheap Invoice Finance Offer
Our funding partners often come up with invoice finance offers and discounts to try and attract new clients. We have had one offering from one or our partners who is willing to offer a pricing discount to just a handful of new customers each month, in order to help get them across the line and onto their book as clients.This offer hasn't been added to our list at this time as we have only just...
- 03 Jul
5 Tips If You Only Have One Customer
Most businesses start with one customer, however remaining reliant on just one customer can have serious consequences, which I detailed in my recent blog post "Help with invoice finance prime debtor problems". Whilst the problem is particularly problematic if you are using factoring or invoice discounting, the risks to your business also apply if you don't use this type of funding.The...