The Importance of Factoring (For All Businesses)

It doesn’t matter how big or small your business is, everyone can benefit from invoice factoring. From small independent startups to larger SME’s; getting your invoices paid in full and on time is crucial for all business. After all, it could seriously affect your cash flow.

Below we’re going to be looking at just a handful of reasons as to why factoring is important; from flexible funding to boosting your overall revenue…


Access To Money Fast

Being able to get your hands on extra cash in a timely manner is extremely important for all businesses. Sometimes you find yourself waiting around on unpaid invoices and are forced into a position where you don’t have enough funds to pay your staff.

With invoice factoring, you get up to 85% of the invoice amount paid up front within a matter of hours. No waiting around and no long lasting damage to your cash flow.


Flexible Funding

Being able to have access to flexible finance is extremely important for all. It means that you can meet all of your financial needs at any given time. No longer will your customers control your cash flow, factoring puts you 100% in control of your finances.

This flexibility also means that you can stop using the service at short notice, as the contracts are short term. Although we would encourage you to continue factoring, if it’s not for you then you can leave within a short time period.

access to finance

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Low & Affordable Fees

In comparison to loans and and customer credit extensions, factoring is very low cost. Fees are usually around 1% – 2% of the total invoice – with it going no higher than around 4% in most cases. This is important because it could cost you less to factor invoices than it would to hire someone to constantly chase them for you (as well as someone to keep in top of all your finances).


Meet Growing Demands

Factoring your invoices is important if your business is growing because the service can scale with you. Using a factoring company, like ourselves, means we can take on any and all of your invoices for you – even if they double. You don’t need to hire more staff to take on the extra workload when it comes to invoices.

You also won’t have to worry about your cash flow and you can rest assured that staff will be paid on time and that you can safely scale your business with no financial issues.

pile of paperwork

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Boost Business Revenue

Having better availability to working capital means that you do not need to worry about where money is going to come from for new business. This is important because it gives you better peace of mind when it comes to generating more business.

It also means that you can offer more attractive payment terms to your customers if you wish, as you will still get paid the invoice amount from the factoring company. In turn you may increase your customer base and there’s less worry when it comes to larger invoice amounts (as many factoring companies cover up to £500K at a time).


Back Office Support

Most important and crucial of off of these benefits is the amount of support you will receive from a factoring company. Not only do you get invoices paid when they’re raised, but the factoring company will also take over the recovery of the money from your clients. This frees you up to do what you do best – rather than wasting time chasing payments.

So there you have it, just a few of the many reasons why it’s important to factor your invoices no matter what size your company is.

Do you already factor your invoices? Are there additional benefits we’ve left out that you think are just as important? Let us know by tweeting us at @CCC_Finance!

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