The Benefits
Two problems conspire to constrain the growth of today's
small to medium-sized business: late paying customers
stretch the liquidity of a business to its limits and
impose additional interest charges, while overdrafts
based on real estate security provide an inflexible form
of finance which is unable to respond to sudden increases
in orders and rapid growth.
Factoring and Invoice Discounting provide a set of
financial and professional services to defeat these problems
and thus enable businesses to survive the inevitable
cash flow crises and realise their growth potential.
The
type and extent of services provided range from that
of full-service Factoring, which takes over the administration
of the client's sales ledger including all debtor collection
functions, to the sole provision of funds against outstanding
invoices provided by an Invoice Discounter.
By making maximum use of one of a company's most significant
assets – its unpaid invoices – the members
of the Institute for Factors and Discounters can give
a business the development opportunity it needs, and
in today's business climate it is more important than
ever to be able to grow and compete rather than merely
survive.
A large number of companies already successfully enjoy
the benefits of Factoring and Discounting.
The advantages to be gained by users of Factoring and
Invoice Discounting include:
- freeing of cash wthin 48 hours,usually varying between
75 per cent-90 per cent, of the value of an invoice
as soon as it is issued; this allows business to accelerate
growth
- the ability to utilise the cash flow to obtain
early settlement discounts from suppliers/creditors
of up to 5 per cent
- the reduction of management time spent
onchasing slow payers enables managers to concentrate
on areas more appropriate to their responsibilities,
such as finding new business
- the availability of bad debt
insurance (known as non-recourse factoring).
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