Factoring – The Facts
Introduction
Many businesses, both large and small, are turning to factoring as a method of solving their cash flow problems or to relieve themselves of the task of credit control. Factoring, or its sister method of invoice discounting, (known collectively as invoice financing) are ways of borrowing money on the value of your sales ledger. As more and more businesses realise the value of this service, so the invoice financing industry is growing and more providers are appearing in the market place.
You don’t even need a lengthy trading record – although some factors prefer this, most will now advance money to businesses which have been trading for less than twelve months, and many who specialise in start-ups. One type of business, which finds this especially useful, is the recruitment industry, where clients may not pay for several weeks after invoicing, but where the temporary members of staff have to be paid at the end of each week.
Will it be right for my business?
This is a decision only you can make, but as a general rule, the fewer management people you have, the more important it is for them to concentrate on other aspects of the business than chasing money from customers. And if you are a very small business, you may prefer having the sales ledger task carried out by a factor rather than employing more staff who will take your total staff numbers into any of the categories which restrict your freedom of hiring and firing.
Where you have a wide variety of customers and feel that some of them require special treatment, you should be sure to choose a factor that will act on your instructions on how to handle such special customers.
IVA's
The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.
In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]
What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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DANGER
Due to the tremendous demand for debt consolidation services the United Kingdom is now overloaded with debt management companies that contain misleading information. [more...]