INVOICE FACTORING AND THE BENEFITS FOR SMALL BUSINESSES
November 25 2016.



On the surface, invoice factoring might seem like yet another kind of business finance that’s packed with jargon and difficult to understand. But it’s actually a very useful product, and if you can get past the technical language it might be a good fit for your business.

What is factoring?

Factoring is a subcategory of invoice finance, aimed at any business that sells to other businesses on credit. 

If you invoice your customers, you’ll usually accept a purchase order from a customer, finish the work, and invoice for it on completion. Payment terms can be anything from 14 days to 120 days, assuming the customer pays on time — if not, that payment delay gets even longer.

Broadly speaking, with invoice finance you ‘sell’ owed invoices to the lender, shortening the payment period so you get paid sooner for work you’ve finished or products you’ve delivered.

How does factoring work?
As soon as the invoice is raised, you send it to the invoice finance provider to get an advance worth most of the invoice’s value.


For the full story at smallbusiness.co.uk CLICK HERE