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Factoring allows businesses the opportunity to borrow against money that they expect to receive in the future from invoices that have been submitted. A factoring broker is an individual or business that facilitates the sale of one company’s invoices to a factoring company. The unpaid invoices represent the money that a company is owed for goods and services that have been sold. The process of buying these invoices is called factoring, and those doing the buying are called factors.

Many people think that factoring is just for businesses in times of recession, or financial hardship, when many businesses are looking for financing help. In fact it used by 1000s of businesses as a tool for enabling smooth cashflow on day to day basis.

Should you consider broker factoring?

Many business owners are too busy and unskilled to waste time getting quotes from several factoring companies so instead they use broker factoring. A factoring broker will be very skilled in business finance, sales and marketing and to this end can be a real plus to work with to find a great factoring deal.

A good factoring broker will help the business looking for factoring to understand what information is needed before accounts receivable can be presented for sale. A factoring broker will need to information to provide factoring quotes. A business looking for a factoring facility will therefore be asked to gather lots of financial information on its company such as:

  • Accounts receivable reports
  • Customer information
  • Some general information on the company

Factors a good broker factoring company should make businesses aware of

When a broker factoring company is evaluating various factoring services for a business it need to make the customer consider aware of both the advantages and disadvantages of the factoring service being offered.

A good broker factoring company should know exactly what a business should expect before it makes a commitment. Remember what looks good on the surface can often lead to undesirable situations later on. Keep in mind there may be additional fees, including charges for online account access, or return fees when an invoice is not paid according to terms. Evaluate the fee schedule thoroughly before choosing to sign with any factoring company.

A broker factoring firm should explain the ‘small print’ of a factoring firms policies and procedures so that an informed decision can be made.

It is important to remember that not all factoring companies operate in exactly the same way

  • potential clients should evaluate each factoring company they consider based on the amount of fees charged
  • The terms and conditions of the factoring contracts
  • The method of delivering funds
  • How factoring company staff will interact with your customers.
  • Understand all factoring costs and charges
  • Understanding what happens when your company decides to end the factoring agreement
  • Understand how collections of unpaid invoices are handled
  • Get to grips with how remittance of payment on factored invoices are handled

The UK factoringhelpline.co.uk has been a leading business advice service for the last 10 years. Its staff have spent many years in the banking, finance and insolvency industry. The factoringhelpline.co.uk has helped over 10,000 business gain access to factoring facilities enabling them to get access to future cash payments. The factoringhelpline.co.uk knows first hand the challenges small business owners in the UK face in today’s difficult credit climate. For advice and solutions on factoring future cash payments please call 0800 597 4757.