If you’re one of the increasing number of businesses thinking of giving invoice factoring a go then you might find yourself worrying about what other people – in particular your customers – may think. Maybe you’re wondering what the difference is between regular factoring and confidential factoring, and which is the best choice for your business? Keep reading – we’re about to explain.
What Is Regular Invoice Factoring?
Invoice factoring allows you to free up any funds tied up in your unpaid invoices. In simple terms, the funder pays you up to 90% of the value of your invoices, with the funds usually hitting your bank account in 24 hours. This means you’re not waiting 30, 60 or 90 days (or even longer) for clients to pay you. When the invoice becomes due, the funder chases the client for payment, handles receipt of the payment and then releases the remaining funds to you, minus their small fee. Simple!
However, if you’re concerned about confidential factoring then you may find regular invoice factoring isn’t for you. Your clients and customers will know that the factor is handling your accounts receivable as they’ll have contact from them when payment becomes due. Not ideal if you want to keep your finances to yourself. So, what’s the solution?
Confidential Factoring Saves the Day
Confidential factoring, or invoice discounting, as it’s more commonly known, provides your business with all the same benefits as regular invoice factoring – the ability to pay your staff and contractors on time, stable cashflow, money on hand for business costs such as purchasing supplies and materials, paying HMRC or paying for advertising and no more waiting around for payments which are late or never materialise.
The main difference between regular invoice factoring and confidential factoring is that with invoice discounting, you maintain control of your customer relationships. So when an invoice becomes due, you’ll follow your normal procedures to chase the client for any overdue payments. In this way, your business finances stay completely confidential and your clients and customers need never know that you’re using invoice factoring to help with your company cashflow.
Which is the Best Choice for You – Regular or Confidential Factoring?
Simply Factoring Brokers can help you decide which option is best for your business, with confidentiality being the main deciding factor. It may be that you’re happy to have a funder handling your accounts receivable, leaving you with more time to focus on running your business or expanding into new markets. You may prefer not to have to deal with late paying clients, and confidentiality may not be as important to you as it is to others.
Of course, it may be the case that your customer relationships are something you want to stay in control of and you want to ensure that your business finances stay confidential, in which case confidential factoring is the best choice.
Whichever option you go for, your business will reap the benefits. Invoice factoring and discounting are cost-effective, low-risk ways to inject cash into your business in the long-term, without worrying about your bank balance. To find out more and see how we can help you, give Simply Factoring Brokers a call on 0330 134 2826, or email us at firstname.lastname@example.org.
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