Full Service Factoring IS Particularly Suited to Up-and-Coming Small and Medium-Sized Enterprises
Full Service Factoring provides working capital finance – up to 85% (and sometimes up to 100%) of the value of approved debts i.e. the value of those invoices falling within debtor credit limits sanctioned by the Factoring Company. Full Service Factoring can complement existing overdraft or loan facilities.
The credit assessment of client’s debtors is a critical issue. Factoring Companies are looking for your customers to be credit worthy and will use trade reference agencies to obtain an opinion. This would be done without your customer evening knowing it is taking place.
The factoring Company can also usually provide optional protection of bad debts. Monies outstanding from debtors can be underwritten against bad debt arising from the insolvency of the debtor, subject to the establishment of a satisfactory credit limit.
Full Service Factoring also includes credit control and cash collections. Monies outstanding under a client’s sales ledger are “chased” by the factoring Companies Operations staff, in accordance with guidelines advised by their client. The Full Service Factoring will provide complete administration of the sales ledger allowing management to concentrate on developing the business.
Full Service Factoring suitability
Factoring is for sole traders, partnerships or limited companies usually having a turnover in excess of £40,000 per annum. However, it is now possible to Factor single invoiced and debtors, which provides the maximum in flexibility and convenience.
Full Service Factoring Benefits
- Working capital finance tailored to grow in relation to the volume of sales and quality of debtors, not aligned to the value of the assets of the business or it’s owners
- Improved cash flow – cash flow becomes more predictable
- Quality credit control undertaken by experienced staff, with 365 days per year cover
- Protection (optional) against bad debts
- Release of management time
- Reduction in administration costs
- Clients can draw down any amount they choose within funds available and maximum limits approved
Full Service Factoring cost
- Discounting Charge is similar to Bank Overdraft rate expressed as a margin over Base Rate
- Administration Charge – individually assessed and based on the workload. Typically 0.5% to 1.5% of gross turnover