Invoice Finance Tips

These are some of the invoice finance-related tips we have published via Twitter:

  • Factoring can be used in conjunction with trade finance to repay the cost of your imports and help with credit control
  • Small invoice sizes can drive up the cost. Some discounters run "bulk" ledgers where it makes no difference to cost
  • In addition to an overall ceiling some factoring companies have funding limits on each debtor these vary between factors
  • Discount charge is a % but is normally a margin charged over the base rate which you need to add to calculate it
  • The funding limit or payment ceiling is the maximum amount of funding, most factors won't restrict this unnecessarily
  • Factoring tip: re-factoring charges are applied by some #factoring companies when invoices exceed a certain age. Not all factors charge them
  • Invoice finance companies - the biggest single factor that inspires online trust = customer testimonials & recommendations
  • Contra account = debtors that you also owe for supply many invoice finance companies won't fund them or hold retentions
  • Restrictions that inhibit funding include a recourse period when funding is withdrawn so check the age of your invoices
  • Funding restrictions besides initial payment %: prime debtor restriction, funding limits, payment ceiling & retentions
  • Don't just compare initial payment percentages between #invoicefinance offers, consider other restrictions e.g. PDRs
  • Service charges or administration charges may be subject to minimums so watch out when comparing invoice finance deals
  • When comparing invoice finance offers don't just compare service charges, include discount charges and other charges
  • Debt factoring is another term for factoring ie funding & credit control.
  • Applying for factoring? get your ledger up to date this will reduce the factors perception of the workload and maybe price
  • Bad debt protection (aka non-recourse) can have a first loss clause that differs between invoice finance companies
  • Most invoice finance companies offer electronic invoice upload but the level of work for the client varies dramatically
  • You can still qualify for confidential invoice discounting with poor financials provided your systems are good
  • Not all bad debt protection is the same. You can get 100% coverage on invoices covered by credit limits
  • The recourse period is the period after which a factoring company withdraws funds if an invoice is unpaid - the period can vary
  • Confidential factoring the factoring company chases customers in your name using a phone number they answer as your business
  • Invoice finance from an independent separates your funding from your bank lending
  • If you want to move factoring companies some factors will help with any exit fees from your factor to get your business
  • Invoice finance doesn't have to be long term it can be for single transactions, seasonal peaks or large orders
  • Bad debt protection can be added to invoice finance facilities so you don't need to worry about customers not paying
  • If you give customers credit terms e.g. 30 days invoice finance can release a lot of the money tied up in your invoices
  • You can get funding against even small value invoices but not from all invoice finance companies example to follow
  • If you want easily predictable fees and charges there are single-fee facilities available now from several factors
  • Avoid time-consuming monthly reconciliations, some discounters have auto reconciliations & some run shadow ledgers
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Examples of funders we work with:

leumi abl
giant finance
apollo business finance