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Finance Auction Sites

This year the increase of financial companies offering Factoring, Selective Factoring and Invoice discounting as an alternative way of funding is incredible. For the team at Select Factoring its a great thing to see, as the financial market realises there is a need for such facilities.

Some of the lenders have signed up to Auction sites where companies place their invoices online and financial lenders bid to offer the best deal on the invoices.

But do companies really want this facility. Although the increase of lenders, in the grand scheme of things it is only a tiny percentage of Small to Medium enterprises that actually use factoring as an alternative funding source.

If you don’t have the time or the inclination, placing invoices on a bidding site would be incredibly quick and efficient, but generally most individual lenders can have the cash with you within 24 hours.

What are the risks of using auction sites, like most things, you may be offered and incredible deal but the purchaser could pull out, there could be hidden costs, you could be let down right at the last minute, or you may not receive the amount you required.

It is sensible to contact 2 or 3 factoring lenders on an individual basis and get a quote from each. Generally, they will consider your invoices, make sure those clients are credit worthy and finally take a tiny percentage of the total amount of money as their fee. This fee can be tiny compared to the interest you may pay on a business loan.

Some factoring lenders may only consider a certain amount of money, this could be anything over £10,000. So, in this respect, if you are a smaller company, putting your invoices out to auction maybe the best deal, if you are looking for smaller amount of money, this way companies can offer you their services depending on what you require.

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