Customer relations and cash flow can be improved with the use of factoring or invoice discounting. With factoring the responsibility for administering and collection of your sales ledger rests with the factoring or invoice discounting companies, therefore a company no longer has to pressure its customers for payment on overdue accounts. When customers are aware that a factoring or invoice discounting is involved, customers may even pay their bills more promptly improving your cash flow. Since the factoring or invoice discounting companies may also be handling accounts for several other of their suppliers, customers will be careful not to jeopardise their credit rating, as non-payment to one supplier may immediately damage their rating with others. Factoring or invoice discounting may even save a company money. Many firms are not able to duplicate their services offered by a factoring or invoice discounting company on their own for the same cost.

• Credit investigations
• Collection of past due accounts
• Record keeping, and all related accounts receivable costs may be significantly higher if a firm must expand its own credit department or use an outside collection agency
• Freed of credit and collection problems, a company can concentrate its efforts on increasing profitability
• A company using a factor can often obtain more credit information on new customers more quickly
• Factors may be able to increase a company's sales volume by advising it of other potentially desirable customers