Frequently Asked Questions ?
Below you can find answers to some of the questions we get asked on a daily basis, if you have more detailed queries please contact us to speak to one of our experienced team!
What is factoring?
Factoring is used to describe a range of services where finance is made available to provide funds against the security of trade debts. It can also offer a credit control and sales ledger service. It is available for companies who trade business to business, offering goods or services on credit. Factoring can benefit companies by ensuring sufficient working capital to meet cashflow requirements. It is seen as an alternative to bank overdrafts with many added benefits.
How does factoring work in the UK?
There are around 80 factoring and invoice discounting providers in the UK, each with different risk and selection criteria. Unlike banks, factors have a varying view and capacity for certain types of business risk. New financiers are joining the market all the time and new schemes are being developed; Factorchoice keeps pace with the changes. Intense competition between the factors means that facilities are generally good-value and compare well to traditional bank lending. Here at Factorchoice we provide a neutral information service, knowing who to talk to in order to obtain the most cost effective solution for your needs.
We need finance right now!
Some factors move a lot faster than others. One phone call to Factorchoice will establish whether factoring or invoice discounting can help you. If we can, our team will arrange for suitable factors and discounters to be on hand within hours and funding could then be in place within days. Remember our service is free, independent and fast. The team at Factorchoice.net have helped thousands of businesses find financing solutions.
How can factoring help my business?
Factoring can generally provide working capital to businesses selling to other businesses on credit. By purchasing the businesses invoices, the factor finances the cashflow gap that many companies face between raising and invoice and getting paid. The amount of factoring finance available is mainly determined by the value of sales the business makes - as sales increase so does the finance. Factors generally provide 85% cash against sales - sometimes a lot more and sometimes less.
I'm in construction and two factors have turned me down...
Some factors include the construction sector within their overall portfolio of acceptable risks - admittedly it usually accounts for a very small proportion. The Factorchoice.net team know which factors have unused capacity.
How does Factorchoice get paid?
If we introduce to them a business which eventually uses their service the factor will pay us for locating that client and making an initial risk and criteria assessment. Factorchoice will, wherever possible, find two suitable and potential lenders for the applicant leaving the final choice to the business owners. Factors give best prices to our clients to ensure continuing business from us. We are amongst the largest introducers of factoring business in the UK. Businesses using Factorchoice to find a factoring facility are given a free, expert service.
Can we move to another factor?
Call us in confidence for further immediate information on alternative services and prices. You may want to switch to a different facility with your existing factor or to another factor entirely to save money or to get an improved level of service. Moving to another factor can only be done within the terms of the Agreement you signed with the factor. Check the small print for financial penalties for early termination of a contract. The move itself is relatively easy with the new factor taking over financing of your existing book debt.
We export toys to Europe. Payments are always late. Would factoring help?
As long as you are selling on normal credit terms to reputable buyers you should be able to factor your sales. This will help you get payments a lot quicker - factors have offices overseas or multilingual staff to help sort out delays with debtors. You can also draw down up to say 85% of your invoice value straight away if you want. Many businesses use this improved cashflow to negotiate prompt payment discounts from suppliers.
Contact us now to see how we can help your businesses cash flow, completely free of charge!