The solution for owner managed businesses?
Introduction
Whilst not a new financing form, factoring can play a huge part in the success of a business.
Why?
Simply because strong cash flow is the main element of business longevity. Its acceptance has grown over the years since its introduction to the UK in the 1960’s, and is now rivaling traditional forms of funding such as the overdraft. This sway in popularity is likely to continue following recent legislation such as the Brumark case (which called into question the bank’s reliance on debenture based lending for their overdraft facilities).
Factoring can assist businesses through what is often their fastest growth phase -start-up - ensuring cash is available to meet expected and unexpected calls on liquidity. Once established, the ongoing provision of predictable cash flow can ensure that opportunities are grasped as they arise, and business plans are brought to fruition.
So how does it work?
Factoring releases up to 90% of the value of unpaid sales invoices within 24 hours of them being raised. The remaining balance is then made available when customers settle their outstanding invoices.
Additionally start up, young, and maturing businesses often have limited resources. A certain element of credit management is built in to a factoring agreement releasing valuable time for key decision-makers to source new business and adds to the bottom line. Statements and reminder notices will be sent to customers reminding them of outstanding debts, telephone chasing is also included, discussed and tailored to individual requirements at the outset.
A credit vetting facility is also available, providing a valuable insight into a customer’s worth, prior to trading with them. This opinion can help avoid the heartache of a bad debt, which if relating to a large customer, could also lead to business failure.
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...]