Latest News - Invoice Finance

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Use Invoice Finance to free your business
from cash restraints!

Invoice Finance involves you selling your invoices to a debt factoring company. In return it will process the invoices and allow you to draw advances against the money owed to your business. The debt factoring company will provide a debt collection and ledger management service.
Businesses use this important service to improve cashflow and reduce administrative overheads. 

Invoice Finance, at a cost, allows you to increase your working capital and improve cashflow.

Invoice Finance is offered to businesses trading with other businesses
on credit terms. 

After signing an agreement, the debt factoring company may agree to advance up to 85% of approved invoices. Payment in most instances is made within 24 hours. Usually all sales go through the factor.

What makes a business suitable for factoring?

Your business may be suitable for factoring if it has:

• an annual turnover of at least £50,000, although some factors will consider start-ups and smaller businesses.
  
  
• more than just a few customers.
  
  
• no single customer accounts for more than about a third of turnover.
  
  
• customers that accept the standard payment terms for the industry.
  
  
• customers that accept a reasonable period of credit.
  
  

The cost of Invoice Finance

Invoice financing is a competitive business with many suppliers, so it pays to survey the various companies in the market.
Quality of service is vitally important.

The rate of interest

Charges may range from 1.5% base rate to 3% over base rate. Interest is calculated on a daily basis.
These rates are roughly equivalent to bank overdraft rates and can even be more advantageous.

Credit management fees

There will be a fee for credit management and administration. The amount will depend on your turnover, the volume of your invoices and the number of customers you have.
Typical fees range from 0.75% of turnover to 2.5% of turnover.

For further information simply fill in our online enquiry form or email:enquiries@baxterramsay.co.uk