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Factoring is a streamlined process that allows your business to access up to 90% of the gross invoice value shortly after issuing the invoice to your client. You receive the remaining 10% once your client settles the invoice, with some lenders advancing up to 95% in certain cases.
Simply put, you create and upload the invoice to the lender’s portal, then request the funds you need. Some lenders offer options for them to handle credit control, or for you to manage it yourself. Once the invoice is settled, the remaining balance is released to you.
How does it work?
Invoice
You generate and send the invoice to your customer according to timesheet hours.
You generate and send the invoice to your customer according to timesheet hours.
Upload
You upload/send the invoices to the lenders portal.
You upload/send the invoices to the lenders portal.
Advance
The lender will promptly advance up to 90% of the invoice value, typically within a few hours.
The lender will promptly advance up to 90% of the invoice value, typically within a few hours.
Recoup
Your customers then pay the invoice amount directly to the lender on the due date.
Your customers then pay the invoice amount directly to the lender on the due date.
Paid
When payments are received by the lender, you receive the remainder of the invoice amount.
When payments are received by the lender, you receive the remainder of the invoice amount.
Pros & Cons of Factoring
Immediate payment upon invoicing.
Quick and straightforward setup process.
Minimise time spent on invoice collection.
Ability to offer customers flexible payment terms.
No need for a lengthy trading history.
It relies on the creditworthiness of your customer (we can help check this for you).
It only works for business to business sales.
It’s not confidential.
Bad Debt Protection
Most factoring facilities include bad debt protection to safeguard against instances where your customer fails to pay or enters administration (terms may vary).