Is Debt Factoring Right for Your Business?

Managing a healthy, positive cash flow is essential to growth and prosperity for any company. How you get that cash flow, however, doesn’t have to be as straightforward as earning more than you spend.

Ultimately, you will need to have a healthy profit margin, yes, but payments can be delayed for several reasons. Delayed payments tie up money owed to you but waiting for those funds to be released isn’t always a good option.

That’s where debt factoring comes into play.

What’s Debt Factoring?

Debt factoring means selling your invoices to a third party. You will usually sell these invoices at a lower rate than they are worth. In exchange, you’ll get the money owed to you far faster, allowing you to inject that cash into paying bills, your employees, or making key investments for the sake of your company. Debt factoring can be used for a set number of invoices or as a service, allowing you to choose the approach that works for your company flexibly.

Is Debt Factoring Right for Your Business?

At the end of the day, if you can afford to wait for invoices to be paid, you won’t need debt factoring. If you struggle to make timely payments because of that natural delay associated with invoice payments, then it can be just what your business needs.

Debt factoring improves cash flow since you can quickly access money from your invoices. This way you can avoid late fees for your payments, can take advantage of sudden, time-sensitive deals, and keep your business operating efficiently. While you won’t get the full worth of your invoices by using debt factoring, these benefits often offset the upfront cost.

How to Find the Best Debt Factoring Solution for You

The best way to obtain any type of financing is to use a broker. There are many providers, and manually searching through your options takes time and does not guarantee you’ll find the best offering for your business.

That’s why you’ll want to explore your options for Debt Factoring at Specialised brokers like this offer independent quote searches that make it easy to determine which factoring company is right for your needs. With huge price differences between providers, comparison is key to getting a good deal.

How Long Does Debt Factoring Last?

Debt factoring can last as long as you want it to. You can use it on a selective basis and choose which invoices you submit. Rather than a minimum cost, you pay per transaction. This is great when you’re in a pinch.

If you need a longer partnership, you can also fund against all your invoices. This can be done for a year or more. With a partnership, there can be a set fee, with some fees starting from £3000 per year (+VAT) for the service. If there’s just one invoice you want to use, then use selective invoice financing instead. In short, the level of commitment is entirely up to you and what your business needs.


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