Small Business Factoring - What is it?

Factoring Solutions Ltd are Small Business Factoring brokers. We arrange Small Business Factoring facilities for UK businesses to improve their cashflow through Small Business Factoring solutions.

Small Business Factoring is an extremely flexible method of providing cash flow for a business. The amount of Small Business Factoring funding available also increases in line with the growth of the business.

How does factoring work?

Under a Small Business Factoring facility, copies of the sales invoices are provided to the Small Business Factoring company. Once received, the Small Business Factoring company in the UK will immediately advance up to 85% of the invoice value (in some circumstances, advances of up to 100% are available). The balance of the funding is received when the customer pays. So the business benefits from "accelerating" the cash flow by up to 85% of the debtor book.

How much does factoring cost?

The cost of funds is similar to that of the conventional overdraft (1.5% to 3.5% above base. A service fee will vary significantly depending upon workload of the factor, but this can vary between 0.5% to 3% of turnover. As every client is different, each deal is priced accordingly.
By using a Small Business Factoring facility, the factor provides a credit control function and chases outstanding debts on your behalf. This gives you the advantage of having a professional credit control department working for you, but your customers will be aware that you are factoring.

How can factoring help me?

Small Business Factoring facilities can be used to accelerate cash flow in a number of situations:

• Start up or phoenix business Management buyouts Business expansion
• Corporate acquisitions Funding
• CVA's
• Company purchase of own shares
• Replace bank overdraft (often removing your house from the bank's security!)

Small Business Factoring is also available from specialist Small Business Factoring companies for the traditionally hard to fund areas such as:

• Export Construction Industry
• Single Debtor Finance
• Local Authority Funding

Should you wish to source an appropriate factor for your business, or just chat through the pro's and con's of using a factor, then please contact us.

So in summary...