It is no secret that running a company comes with its own unique set of challenges. Efficiently managing cash flow can pose a challenge in isolation. It can be a nightmare for even a healthy company when customers take weeks or even months to pay their invoices. Tired of constant worrying and stress? You could take advantage of business growth by using factoring invoices.

But how does invoice factoring work? Could it be the cash flow tool your company has been looking for? Clients of Simply Factoring Brokers have voiced their frustration of dealing with unpaid invoices, so we make it our business to ensure those payments become effortless.

What Is Invoice Factoring?

Invoice factoring is designed to meet the demand of performing services and receiving payment for them at a later stage. It allows businesses wishing to grow with provided services or goods to “sell” unpaid invoices to a factoring company, thus receiving immediate cash liquidity.

This is the procedure involved:

You provide goods or services to your customer and invoice them.

You offer the invoice to a factoring company, like Simply Factoring Brokers, and sell it at a relatively reduced price.

In less than a day, you receive an immediate advance, most often around 80-90% of the invoice worth.

The factoring company incurs the responsibility to collect payment from your buyer on your favor.

After the customer completes the payment, you get the rest of the invoice total less a small factoring charge.

This straightforward approach allows you to continue running your business smoothly, even if clients take their time to settle payments.

How Does Invoice Factoring Work: A Step-By-Step Scenario.

Let’s illustrate invoice factoring with a straightforward scenario following step-by-step guide:

Step 1: Deliver Goods or Services

Let’s say you own a construction company and a customer has you do a £10,000 project. You create an invoice that includes a 30-day payment window.

Step 2: Partner with a Factoring Company

You submit your invoice to Simply Factoring Brokers for factoring instead of waiting a month (or possibly longer) to be paid.

Step 3: Immediate Cash Advance

The factoring company evaluates the invoice along with your customer’s credit. If they find them eligible, within a day, you get an advance of £8,500, which is 85% of the invoice.

Step 4: Collection Method

Now, the factoring company deals with collecting payment from your client. This saves you the trouble and time of having to awkwardly follow up on payments.

Step 5: During Final Payment and Fee Period

Once your customer pays the invoice, the factoring company will pay you the remaining 15% (£1,500) after deducting their fees, which is usually 1-4% of the invoice value.

This means you obtain instant cash immediately, with the only downside being a nominal fee for the ease of access and reduction in sociopolitical workload.

Benefits of Invoice Factoring for Businesses 

There are various industries that are offered benefits from invoice factoring as listed below.

Cash Flow Improvement

There is no longer a need to sit around for weeks or even months waiting for customers to pay. Instant advances allow staff to be paid and supplies procured immediately, or new opportunities are within arm’s reach.

Credit Control Delegation

With these services, collections are managed by the factoring company. Hence, you will be able to spend less time on administrative tasks and more time growing your business.

Enhanced Business Relationships

Due to the professionalism in which these companies handle collections, the maintenance of positive client relationships is actually fostered.

Adaptive Growth

Invoice factoring can expand as you do. With the increase in sales, there is also more funding available without the need to complete time-consuming loan applications.

Evaluation of Credit Risk

Construction factoring companies have an added advantage of evaluating your customers’ credit profiles, therefore helping you make informed decisions on who to conduct business with.

What Makes Simply Factoring Brokers Best For You

At Simply Factoring Brokers, we appreciate that each business has different cash flow requirements. This is why companies from all over the UK choose us:

Professional Guidance: Our seasoned professionals will assist you in evaluating all factoring options available and selecting the most appropriate one for your business and sector.

Broader Coverage: Your chances of getting the best rates and terms are higher because we deal with numerous reputable factoring companies.

Stated Fees: We greatly value our clients and do not have any concealed charges or complicated terms.

Fast Approvals: Never lose out on a business opportunity because of slow decision making and cash advances.

Personalized Guidance: We offer full process assistance from application to funding and beyond.