If you need to unlock the value in unpaid invoices but require a little help, invoice factoring could be for you. There are many reputable invoice factoring companies on the market that can help you if you need assistance with settling invoices. Whilst many companies do choose to head down the invoice discounting route, there are many advantages attached to invoice factoring. In factoring, the financiers buy your invoice from you for around 85-90% of its value and chase up the payment themselves, leaving you free to focus on other duties.
More about factoring and discounting
There are several key differences between factoring and discounting. In discounting, the financier lends you around 85-90% of the invoice. You remain responsible for chasing the money up and settle up with them when the company has paid you. If you don’t want your client to know you’ve been working with an invoice finance company, this may be the right option for you. However, for many companies who’d rather spend their valuable time doing what they do best as opposed to trying to get invoices paid, factoring is the best option. Some finance companies can even carry out credit checks on behalf of their clients before they start trading with customers.
Which option is right for me?
Sometimes waiting for invoices to be paid isn’t an option, especially if you’re a growing business who needs to obtain the money in question immediately so they can put it back into their budget. Before you settle on an invoice finance company, it could be wise to read reviews and talk to three or four different firms so you can come to an informed decision. Factoring can be slightly more expensive than discounting, but you’ll essentially be getting the services of an outsourced finance team.