A better cash flow helps to save time
and money, leads to greater profits and increases confidence
in future planning.
Flexibility
Factoring/Discounting is one of the most
flexible forms of finance available to business, as the
available funds increase with the value of the credit-approved
invoices.
Costs
Factors/Discounters usually charge a
service fee plus interest on funds utilised. The fees depend
on volume of sales and the level of services that are provided.
Collections
With its professionalism and weight in
the marketplace, a Factor can often collect debts more quickly
and effectively then a small independent business.
Credit Management
The Factor/Discounter can provide the
business with regular, up-to-date informatiom on the status
of its sales ledger and the performance ofits trade debtors.
Credit Protection
The Factor/Discounter undertakes credit
checks on the business's debtors and may set a rate for
credit protection under a non-recourse arrangement. The
Factor/Discounter will pay the business, regardless of whether
the invoice has been paid.
Credit Assessment
A Factor/Discounter has access to credit
reference databases that many businesses may not be able
to afford. A Factor/Discounter can advise the business on
the credit-worthiness of current and potential debtors.
Potential cost
savings from Factoring/Discounting include:
cost of bank overdraft
fewer bad debts
costs of account management, administration
and credit control
no need to offer discounts to debtors
for early payment
management time can be devoted
to other aspects of the business
discounts from suppliers for early
or prompt payment.
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