Client Suitability for Factoring

Client Suitability: Bankers, accountants, or other financial advisors will usually introduce a prospective client. There are also a small number of specialist independent agents who solely concentrate on introducing clients to Factors on a commission basis. The Company will pay commission to introducers in order to generate business. Certain types of businesses are not suitable for Factoring. Generally these are: businesses involved in construction, especially where stage payments are made; businesses that sell on a sale or return basis; where perishable goods are sold; where sales are to the general public; where the goods or services are of a complex nature and there may be a high level of rejection or after sales service required.

The Company will also wish to see a good spread of debtors on the sales ledger. The Company will impose a “Concentration Limit” which will effectively restrict the level of funds available where one debtor exceeds a pre-agreed percentage of the overall ledger. Credit terms should be normal for the industry sector.

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Factoring, in one form or another, has been around for thousands of years. Factoring releases the funds locked up in outstanding sales invoices, is a sure-fire way to turn your outstanding debtors into cash. Factoring is frequently used by businesses to improve cash flow. It can also be used to decrease administration expenses.
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