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Which Business Sectors can Benefit from Factoring?

Factoring is a form of asset based finance which allows your business to unlock working capital from unpaid customer invoices. It can benefit a whole range of businesses, from start ups right to medium sized businesses with big turnovers. But which sectors most often benefit from invoice finance? There are a whole range of benefits which can help businesses in a range of different industries.

Though invoice finance can benefit a huge range of businesses, there are a couple of basic requirements for companies looking into this sort of alternative finance. Due to the nature of factoring and invoice discounting, businesses need to be selling business-to-business and providing credit terms to customers, for example, with 30 day payment terms. As such, retail businesses are often unsuitable for invoice finance, as invoices aren’t issued to customers.

Factoring is a flexible form of business finance, so a whole range of different industries can apply and be considered for invoice finance. No matter what size, industry or situation that your business is in, chances are you’ll be in with a shout of securing funding.  However, there are a fe factors that can influence the amount of funding that your business can unlock.

Although almost every industry is considered to be ‘factorable’ to some degree, there are a few generalisations. For example, there are factors that can influence the amount you can be advanced from your invoices. Often, industries seen as ‘riskier’ can be offered lower advances – for example, the construction and IT software industries. Popular factoring sectors such as recruitment, wholesale and distribution, manufacturing and business services can be offered advances as high as 95% of the invoice value.

Invoice finance is a great option for funding for a range of businesses – if you’re in need of cash flow, it could be worth a call.

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