What Is Factoring?

Factoring is like an overdraft that is linked to and secured on your debtors. Unlike an overdraft, it typically advances 75% or more of your debtors. Factoring is not a fixed facility, it grows as your debtors grow.

In addition, the factoring company will undertake your credit control for you. This means you get a professional credit control department issuing statements and chasing up payments for you - giving you more time to run your business.

However, all good factoring companies recognise that your relationship with your customer is paramount. They will work with you to tailor their service to get the right balance between getting your money in efficiently and protecting your client relationships.

Receivables Finance

Receivables Finance is another way of describing a factoring service. The 'proper' accounting term for your debtors book is your accounts receivable. Literally the accounts you are due to receive.

Factoring is a way of borrowing money secured against the people who owe you money - that is your debtors book or accounts receivable.

Invoice Factoring

Invoice factoring, also known as invoice discounting, is a variation of factoring that does not involve credit control.

To qualify for invoice factoring you typically have to be a larger business and your accounting and credit control systems have to be of a sufficiently high quality.

Invoice factoring also tends to have a higher advance rate giving 80% to 90% of debtors or even higher in some circumstances.

Ready To Tackle Your Cash Flow?

If you want more information about how ICAN Finance can help with your cash flow problems or have any other questions don't hesitate to call us on 0845 456 8 999 or contact us online.