In simple terms, Invoice Factoring in the UK is a way of selling your invoices to a debt factoring company or ‘funder’. The factoring company then instantly provides between 80-90% of the cash tied up in an invoice, so you can get back to growing the business with money in the bank.
How does Invoice Factoring work?
The process of invoice factoring in the UK is relatively straight-forward. Once you have provided goods or services to your customer and raised an invoice, you can then sell that invoice to a factoring company. The company will then provide you with an advance of up to 90% of the value of the invoice, minus any fees. Once your customer pays the invoice, the balance (less the fees) will be paid over to you by the factoring company.
Benefits of Invoice Factoring
There are a number of benefits associated with invoice factoring in the UK, which is why it has become such a popular funding solution for businesses in recent years.
Perhaps the most significant benefit is that it provides businesses with access to much-needed cash flow. This is because businesses can receive an advance on their invoices within 24 hours, rather than waiting up to 90 days for payment. This can be a real lifeline for businesses who are struggling to make ends meet or invest in growth.
Access to cash: One of the main benefits of invoice factoring in the UK is that it provides businesses with access to cash that would otherwise be tied up in unpaid invoices. This can be vital for businesses that need to keep cash flow moving in order to maintain operations and grow.
Improved cash flow: Invoice factoring in the UK can also help to improve your business’s overall cash flow position by releasing funds that would otherwise be tied up in unpaid invoices. This can give you more flexibility when it comes to managing your finances and can help to reduce the risk of late payments or missed opportunities.
Flexible funding: Invoice factoring in the UK is a flexible form of funding, which means that you can use it as and when you need it. There is no need to take out a fixed loan or agree to set repayment terms, which can give you more control over your finances.
Boosts your credit rating: Invoice factoring in the UK can also help to boost your business’s credit rating by demonstrating that you are managing your cash flow effectively and are able to meet your financial obligations. This can be helpful if you are looking to secure further funding in the future.
Easy to set up: Invoice factoring in the UK is relatively easy to set up and can be done in a matter of days, which means that you can get access to funding quickly and without any hassle.
If you are looking for a way to improve your business’s cash flow and access working capital, invoice factoring could be the ideal solution. To find out more about how invoice factoring works and how it could benefit your business, get in touch with a Simply Factoring Brokers today.