Invoice factoring is a form of invoice financing that can free up a great deal of time and help you to focus on your core duties instead of chasing up business owing money to you. An invoice factoring company essentially buys your invoice from you for a slightly reduced fee, whilst giving you the financial boost you need to continue to prosper. Invoice factoring is ideal for companies who wish to spend time doing what they do best rather than chasing up money.
Which form of invoice financing is right for me?
The difference between factoring and discounting is that in discounting you remain responsible for chasing up money but the company doesn’t need to know you’ve been working with an invoice financing firm. However, in factoring, the company who owes money will know you have outsourced collections to another business. However, getting a factoring team on the case can prove indispensable when it comes to seeing the invoice settled. Invoice financing in general allows companies to unlock the money they need from unpaid invoices in order to grow their business without having to wait around to be paid.
How to choose the right company
When you opt for invoice factoring, you may no longer need to fund an expensive in-house financing team. Companies from all sectors are using invoice financing, and invoice factoring in particular. If you’re not sure which company to work with, it could be wise to do your homework and find out which firms have the best reputations. Simply waiting for invoices to be paid can be damaging to your business. What’s more is that invoice financing costs less than you might think and can give your company the cash flow boost that it needs. Choosing the right financiers can be essential, so it does pay to draw up a shortlist of companies before you come to a final decision. There are many quality companies that can help you get the money you’re owed, whether you’re interested in factoring or discounting.