What is factoring?
If you own a small to medium business and you rely on customers
paying invoices within a 30 day period for your working capital, your
cash flow is effectively tied up in those invoices. This limits growth
and can cause problems when paying staff and suppliers.
Factoring is the process of releasing cash from invoices as soon as
they are issued, allowing you to put the money to work where it is
How much cash can factoring release?
Factoring services can release up to 80% of the value of an invoice
within a couple of days of the invoice being issued, typically you
could receive cash advances within 24 hours.
How much does factoring cost?
Factoring is very competitively priced compared with other types of
business finance. The costs are in two parts:-
1) A service fee, covering the
day to day running and management of your sales ledger, usually between 1.5% and 2.5% of your turnover.
2) A Factor's Discount (interest) charge, which is charged against the
funds advanced. This will usually be a fixed percent above the Bank of England base rate typically around 3%.
The only other cost is refactoring which is essentially the charge applied to debts which are over 90 days old, this is charged at 0.5%. By working closely with our clients it is our aim to ensure this charge is not applied.
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