Is factoring right for my business?

Posted on 3rd January 2015 at 4:10pm by Carl Reader in Business

Factoring is often thought of as a “funder of last resort”, however the market has advanced significantly and there are now a number of factoring companies out there, making the market far more competitive. All of these companies effectively provide funding against your sales invoices, reducing the payment terms dramatically for many businesses. These facilities do however come at a cost, and it can be a more expensive method of financing your business.

You will also need to consider whether you would be best suited for factoring, or for invoice discounting. Invoice discounting services simply provide the financing, whereas factoring companies manage your sales ledger on your behalf. In either case, the ultimate responsibility for bad debts lies with you. There is insurance available against these bad debts, should you wish to mitigate this risk.

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