Despite the recent recession and unstable economy, small and medium businesses have been booming. Why? Because they have locked on to a bit of a secret, a very sensible way to fund their increasing workload that doesn’t involved banks, it doesn’t involve loans or waiting around days to get a decision. These companies have found a process of selecting invoices and drawing the money against them, selective factoring.
This process allows companies to raise funds quickly and continue with an order and production of products.
Factoring is a funding solution whereby you send out all of your invoices to your clients, speak to the factoring company and they take control. Firstly, the lender will give you the funding based on your collection of invoices, usually about 85%-90%. They then chase your customers for the payments, and finally when all the money is in, they take a small fee and the remainder of the money is yours.
Selective Factoring allows you to choose which invoices to want to lend money against. Again, you send out these invoices to clients then inform the factoring agent, who will again chase those particular invoices, once the money has been lent to you. Again, they collect the final payment minus a small fee.
Invoice discounting allows you to take control of all the work, you send out the invoices, you inform the invoice discounting lender who releases approximately 85-90% of the value of the invoices, then you continue to collect invoice payments from your clients, who pay this into the lenders account. When all the money is in, the lender releases the final payment minus a small fee.
These solutions are perfect for companies that need funding to be able to continue running their production lines or increase their fleets. It is quick, money is usually released within 24 hours and it is simple. You’re only lending the amount of money available in your invoices, so there is no chance of over lending and crashing into debt.
The process can be incredibly private, clients need no know that you’ve employed a lender to provide funding or collect payments.
If you’re astute and need finance for your company quickly, Factoring and Invoice Discounting are a great solution.