February 2006 - Small Business News

Improve Your Cashflow Quickly With Factoring
 

As a business owner, you have probably experienced the difficulties many entrepreneurs face in raising a suitable amount of finance when your business needs it. It can be a challenging process, which usually involves creating a long business plan each time you need finance and then trying to persuade a bank to give you the money.

If you add to this the difficulties of late paying debtors and managing your credit policy (who you give credit to) and credit control (how you recover credit you have given) then maintaining your finances and cashflow appears to be a near impossible task! However, help is available in the shape of factoring and invoice discounting.

Factoring allows you to receive up to 90% of the value of an invoice instantly, with the remainder paid after the debt is collected. The speed of factoring makes it particularly useful to small businesses; and it is fast growing in popularity as more business owners see the benefits it can bring.

As you are paid instantly; factoring provides an extremely quick form of finance that can help you to balance your cash flow or finance expansion, without the risk or hassle of a long term loan or other finance agreement.

Your credit control can benefit from the experience that factoring companies have in getting money from debtors, reducing the chances of late or missed payments. Their experience in credit vetting can also help you to improve your credit policy functions.

The cashflow benefits and credit experience also means that you can continue to provide your customers with reasonable credit periods, and can offer attractive credit terms (to trustworthy customers) to help make new sales with only a minimal effect on your cashflow.

Although factoring has been traditionally seen as something for large businesses; small businesses are increasingly becoming aware of the benefits of a form of finance that is both quick and cheap, but without the risk that other forms of finance can carry.

Click here for more information and free advice on how BizHelp24’s factoring services can benefit your business.