Invoice Financing

 

Invoice financing is similar to factoring. It differs in that the company retains control of the sales ledger and credit control.

 

Payments are received into an account managed by the funder. The company is credited with the balance less charges.

 

Because this service is administered by the company it is invisible to clients.

Costs for invoice financing are based on a percentage of turnover, or a fixed monthly fee and a funding charge at a rate over bank base rate.

 

Factoring

 

The funder buys the sales invoices from the company and administers the sales ledger and credit management. The business receives an agreed advance against issued sales invoices.

 

The company's debtors pay the funder. The balance, less charges, is paid when the debtor pays, or after an agreed period. Bad debt insurance is normally possible.

The funder undertakes all credit management and collections. The savings in administration can be considerable.

 

Factoring offers improved cashflow - as sales grow so does a company's available additional funds on those sales and there is no upper limit.