What is Factoring? - How to Talk Invoice Factoring in 10 Essential Phrases

You can walk the walk of your business but can you talk the talk of Invoice Finance? Don’t worry if not, Skipton Business Finance is here to help.

Like any industry we tend to use a lot of technical language that often flies over the heads of the layperson. Although it’s been argued that ‘jargon’ and business language is not all bad, it can be a little confusing.

As an Invoice Finance specialist we tend to use a lot of technical terminology when referring to certain aspects of the funding we provide. We even use some deceiving acronyms - we too are disappointed when someone says CHOCS and doesn’t open a box of Quality Street.

If the jargon is unusual, the concepts probably won’t be. So, here’s a quick run through of the most used phrases in Invoice Factoring starting with…

 

What does “Invoice Factoring” mean?

Invoice Factoring is a finance facility that provides your business with advanced funding against your company’s invoices and an assigned team of experienced credit controllers to collect what your clients owe.

It’s ideal for SMEs with staff that are a little stretched when it comes to collecting payments.

 

What does “Credit Control” mean?

This is the service mentioned above that comes with your finance, as part of an Invoice Factoring facility.

At Skipton you will be assigned a credit controller when you get a facility that you can keep in touch with to approach your clients on your behalf.

They’re friendly, well-trained experts who work with you to develop effective ways to collect your money and maintain those great relationships you have with clients.

 

What does “Accounts Receivables” mean?

The technical term invoice financiers use to refer to the money your clients owe against the invoices that you’ve raised with your finance provider.

 

What do Invoice Financiers mean by “Pre-payment”?

The money that your Invoice Finance specialist pays you against an invoice.

 

What does an “Advance” mean?

This is the percentage value of the invoice that your provider will pay you - sometimes it can vary. The value of advances will be agreed on and regularly discussed between you and your Relationship Manager. 

 

What does “BACS” stand for?

BACS stands for Bankers Automated Clearing System.

You’re right, it doesn’t explain much.

BACS is the electronic payment system used to make payments and it takes approximately 3 working days to be cleared.

 

What doesCHAPS” stand for?

CHAPS stands for Clearing House Automated Payment System. It’s a much faster payment than BACS and guarantees same day payment, very handy if you’re strapped for cash.

But beware that there is a small charge for this convenience.

 

What is a “Proforma Invoice”?

An invoice that’s more than a simple price quotation but also a binding agreement and a written record of the terms have been agreed up front. Firms often send a proforma invoice before delivering their goods or along with their goods.

 

What does “POD” stand for?

Proof of delivery. This can be any document which confirms the successful delivery of goods or fulfilment of a service to the client. It’s important to keep these if ever a dispute is raised.
 

What does “Sales Ledger” mean?

Basically, your outstanding invoices that have been sent to your clients. We work together with you to keep track of this and make sure they get paid on time.

 

Need help getting paid on time?

If you need an Invoice Factoring solution and access working capital from as little as £25,000 up to £5m, then look no further.

Backed by and sharing the ethos of Skipton Building Society, Skipton Business Finance look at the individual merits of a business as part of our underwriting criteria, not just their credit score.

If you would like a no-obligation FREE quote, please get in touch by ringing us on 0800 0854150 (or 0330 1232437 from mobile).

Or email us info@skiptonbf.co.uk.

Or why not utilise the handy form on the right and we'll call you back!