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A Guide to Factoring and Invoice Discounting
Note - if any of the terms below are new to you, do take advantage of our Glossary of Business Finance terms.
The UK market for factoring and invoice discounting continues to grow year on year.
Unlike overdraft facilities which are pre-agreed and relatively rigid, invoice finance provides flexibility as sales grow without the need to re-negotiate the entire facility.
Most businesses trading on credit terms can now be supported, whatever they are involved in providing, the trade debts are on a business to business basis and are "recoverable".
The overriding concern for a finance company is how "recoverable" the debts are in the event that the company ceases to trade or becomes insolvent.
In most cases, the production of a formal offer letter comes following an audit at your premises to perform "due diligence". The factor/discounter will need to audit how well the business is run, what systems are in place and verify that the financial statements and business plan make sense.
The commercial reality today is such that each company will take a differing view of risk and "recoverability" so that funding trade invoices is more a question of finding the right provider with the right view of your business.
If you are not sure that your current debtor book is fundable due to accounts being over 90 days old then talk to us about our UK debt recovery and international debt collection services. We have the experience and expertise to turn your debtor book into a funding proposition.
For more on factoring and invoice discounting follow the links below:
- What is Invoice Discounting?
- What is Factoring?
- Is factoring/discounting suitable for our business?
- Online Quotations for Factoring - A Word of Caution
- The Advantages and Disadvantages of Factoring and Invoice Discounting
- Recourse and Non-Recourse Factoring
- Bad Debt Protection/Credit Insurance Protection
- Export Factoring/Discounting
- Understanding the Funding Proposition
- Security Required by a Factor or Discounter
You may also find our business finance glossary of terms useful.