Choosing the best factoring service

The benefits of a factoring service are as follows:

• Full credit control service
• A service offering the chasing and collecting of outstanding invoice payments
• A factoring service allows provides certainly as to when invoice are going to be paid
• Cash at bank is always present within businesses that use a factoring service
• A factoring service allows businesses to receive up to 90% of the value of your invoices within 24 hours of submitting them
• A factoring service is cheaper than some other forms of business finance.

Costs and Factors to consider when choosing a factoring service

• Quality of service is also important.
• most factoring companies require three months’ notice
• Standard costs arise in two ways – interest and fees
• There may be additional costs for additional d services.
• Discount charges work in exactly the same way as bank interest – 1.5 per cent over base rate to 3 per cent over base rate.
• Credit management fees apply. The amount will depend on your turnover fees range from 0.75 per cent of turnover to 2.5 per cent of turnover.
• Credit protection charges can apply – These will be levied in non-recourse factoring arrangements, where the factor is liable for any bad debts. The amount will largely depend on the factor’s assessment of the level of risk. Typical charges range from 0.5 per cent of turnover to 2 per cent of turnover.