Factoring and invoice discounting enable businesses to release money that is tied up in unpaid invoices.
Both methods involve a third party company advancing money against outstanding debtor balances – a form of asset based lending.
In factoring, the third party company takes over the entire credit control process, managing the sales ledger, chasing invoices and processing payments, meaning that your customers will be aware that you are using a factoring company.
With invoice discounting, your customers are unlikely to be aware of what is happening because you continue to manage all aspects of credit control.
The benefits of both these methods of invoice financing are that:
- Funding can be secured to reduce cash flow problems or grow the business without using other assets such as equipment or stock.
- Up to 90% of the value of unpaid invoices can be released within 24 hours.
- Funding levels increase with your turnover.
- Both methods are competitively priced.
- Useful business advice can often be obtained from factoring and invoice discounting companies.
How we can help
If you are considering invoice financing, the team at Else Solicitors can help you with drawing up all the arrangements and implementing the processes. We have good relationships with a number of invoice funders.
We can provide advice on: drafting contracts; drafting and enforcing securities including guarantees and indemnities; handling all aspects of the transaction and recovering factored debts.
We also offer services to factoring and invoice discounting funders. We can establish pre-facility arrangements, manage the process and also advise on litigation and insolvency issues if the relationship between the business and the funder hits problems.
To speak to a member of the banking and finance team for more advice on factoring and invoice discounting, please call 01283 526200, alternatively you can send us a message and one of our specialist solicitors will be in touch.