Factoring and Invoice Discounting Advice for SME
As an SME business operating in the UK you may be considering alternative financing to the traditional bank loan or business overdraft. Factoring and Invoice Discounting has proven to be a effective route to delivering a confident and sustainable cash flow to help grow SMEs and help them to deliver on goals for expansion and profit.
There are a few issues to consider when looking at Factoring or Invoice Discounting. A few of which we have noted here, but of course we advise that this is always changing and that further expert advice should be sought before any contract is undertaken with a Factoring partner. A few issues to consider include:
Factoring is usually only applicable for SMEs with a turnover of at least £4000 per month, but for newer businesses this may depend on who the customers are and what the value of sales are with them. It is also preferable that the SME has a number of customers, so spreading risk, rather than one single large customer or such. Additionally, SMEs should try to ensure that contracts or warranty provisions are in place. And remember, Factoring is only available for business to business transactions.
There are a few issues to consider when looking at Factoring or Invoice Discounting. A few of which we have noted here, but of course we advise that this is always changing and that further expert advice should be sought before any contract is undertaken with a Factoring partner. A few issues to consider include:
Factoring is usually only applicable for SMEs with a turnover of at least £4000 per month, but for newer businesses this may depend on who the customers are and what the value of sales are with them. It is also preferable that the SME has a number of customers, so spreading risk, rather than one single large customer or such. Additionally, SMEs should try to ensure that contracts or warranty provisions are in place. And remember, Factoring is only available for business to business transactions.
Factoring is great for small businesses with a solid business model, a good customer base, but that maybe finding some issues in invoice payment and cash flow.
Find me a Factor's team is here to help guide to finding a best fit solution to your company's requirements, as well as helping to ensure that you are provided the best terms possible for your requirements and gain the most out of any relationship with a factoring or invoice discounting partner.
Contact us today to discuss your cash flow challenges.
Find me a Factor's team is here to help guide to finding a best fit solution to your company's requirements, as well as helping to ensure that you are provided the best terms possible for your requirements and gain the most out of any relationship with a factoring or invoice discounting partner.
Contact us today to discuss your cash flow challenges.
