The timing of cashflow can be all important in making or breaking a business and the main question on business-owners' lips are: "Can Invoice Factoring solve our cashflow worries?"
Well, in a nutshell, yes it can.
Ideally, money made from trading would come in before, for example, a major bill had to be paid or tax was due. It would be ideal, say, if the money you have earned was paid before your staff need to be paid.
As a business owner, you always have to have one eye on whether or not you have a shortfall of funds - the old adage 'sales is vanity, profit is sanity, but cash is reality' certainly comes to mind! If you have a shortfall, it is known as a cashflow gap (see our comprehensive glossary for more definitions).
A cashflow gap can widen around the end of the month, especially when wages need to be paid, whilst invoices issued to debtors from the same period may not be paid into the business for 30, 60 or even 90 days.
A cashflow gap could also increase due to:
- Suppliers tightening credit terms
- Customers going bankrupt
- Insufficient bank facilities available
- Poor credit control
- Not forecasting ahead
So, as long as your business is offering credit terms, the potential for a cashflow gap to appear will always be there. But there are ways to plug a cashflow gap.
Factoring is one way that can help ensure a fluid cashflow within your business.
Can Invoice Factoring really help?
Invoice factoring is now the most common form of invoice finance in the UK and has two main components, which make it so widely popular as a form of invoice finance:
- You get cash against invoices immediately. This could be up to 90% of the value of your invoices, released up-front to your business
- As it involves advancing a fixed proportion of each invoice, the money available to you increases automatically in line with your business' growth
- This means you can borrow more as your sales grow
- Skipton Business Finance then takes control of the client's sales ledger and the collection of outstanding debts
- Here at Skipton Business Finance, we are experts in debt management and provide a service which differs completely from a traditional overdraft
- We can chase payments professionally and efficiently, to ensure you get the money you are owed by your debtors as soon as possible. This is an extremely effective service for a business that doesn't have an established credit management procedure
This facility is disclosed to the debtors, who will be informed on the invoice that they need to make a payment directly to us.
What are the other benefits of Invoice Factoring?
- The facility keeps pace with the growth of a business
- Savings can be made on debt collection and sales ledger management, as we can do all this for you
- You can receive funds within 24 hours
- Invoice factoring is very well priced against traditional business loans and overdrafts
- Allows you know when funds are going into your bank account, rather than the uncertainty of when invoices will be paid
- You don’t have to secure a loan against any other assets meaning more flexibility for your business
- At Skipton Business Finance, you will have a dedicated Relationship Manager throughout the lifetime of your facility. That means no automated telephone services and no call centres. Just the direct contact details of a highly-trained and efficient Relationship Manager.
Want to find out more?
Go to our Invoice Factoring page now and find out more about the facility.
Contact us today
If you need an Invoice Factoring solution then look no further than Skipton Business Finance.
Backed by Skipton Building Society, one of the largest financial establishments in the UK, means we have funds ready to lend to businesses up and down the country.
If you would like a no-obligation FREE quote, please get in touch by ringing us on 0800 0854150 (call 0330 1232437 if ringing from a mobile).
You can also email us at firstname.lastname@example.org.
Or why not utilise the handy form on the right and we'll call you back!