When to use factoring companies
Factoring companies provide a flexible and cost-effective way to free up working capital that may be tied up in other areas of your business.
Unlike bank loans or overdrafts, which only allow you to work to a fixed limit, engaging a factor company means the only constraint to the available finance is how many sales your company makes.
What is a factoring company?
Effectively factoring companies buy a business' invoices, advancing a percentage of their value every time one is raised.
Typically, factoring companies can also offer some degree of credit management, particularly useful to smaller businesses that find chasing the payment of invoices proves very time consuming.
When to use a factoring company
Almost any company that sells to other businesses and wants to increase its day-to-day working capital may consider factoring. Companies are often constrained by the fact that their debtors will leave settling an invoice until towards the end of the agreed period, although favourable payment terms attract more business.
If you need to place orders with suppliers in order to produce goods or services, but won't get paid by your customers until they are delivered, factoring companies can bridge the gap between raising and settling of your invoices, allowing you confidently to make as many sales as possible without fear of running up bad debt.
Whether your business is a new start-up or your sales are increasing and you've got ambition to expand, Lloyds TSB factoring services offer up to 90% of your outstanding invoice amounts, usually within 24 hours, so you can keep your cash-flow healthy and your operation running smoothly.
How much do factoring services cost?
Get an instant online quote for our factoring services.
Lloyds TSB Commercial Finance Factoring Guide
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- Business Factoring
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- Factoring Services
- When to use factoring companies
- Invoice Management
- Factoring advantages and considerations
- Factoring for internal growth
- Loans, Overdrafts or Factoring
