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Cash Flow Management

Factoring – The Facts

Many businesses, both large and small, are turning to factoring as a method of solving their cash flow problems or to relieve themselves of the task of credit control. Factoring, or its sister method of invoice discounting, (known collectively as invoice financing) are ways of borrowing money on the value of your sales ledger. As more and more businesses realise the value of this service, so the invoice financing industry is growing and more providers are appearing in the market place.

You don’t even need a lengthy trading record – although some factors prefer this, most will now advance money to businesses which have been trading for less than twelve months, and many who specialise in start-ups. One type of business, which finds this especially useful, is the recruitment industry, where clients may not pay for several weeks after invoicing, but where the temporary members of staff have to be paid at the end of each week.

Will it be right for my business?

This is a decision only you can make, but as a general rule, the fewer management people you have, the more important it is for them to concentrate on other aspects of the business than chasing money from customers. And if you are a very small business, you may prefer having the sales ledger task carried out by a factor rather than employing more staff who will take your total staff numbers into any of the categories which restrict your freedom of hiring and firing.

Where you have a wide variety of customers and feel that some of them require special treatment, you should be sure to choose a factor that will act on your instructions on how to handle such special customers.

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welcome to factoring
introduction to factoring
factoring - enquiry form
factoring - the facts
how does factoring work?
how does invoice discounting vary from factoring?
how does invoice financing work?
possible disadvantages of factoring
improve your business cash flow
why factoring?
how do I set up a facility?
the solution for owner managed businesses?
is factoring for you?
are your clients credit worthy?
how to reduce business risk
effective debt collection
what if your clients will not pay?
the iva procedure
why you should pay your invoices on time
what is trade credit insurance?
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