Invoice Factoring - Service

 Houston  -  United States
Invoice Factoring
  • Invoice Factoring
At Catalyst, we specialize in invoice factoring, also known as accounts receivable financing which helps businesses that don't meet the requirements for a traditional line of credit. We can help you significantly improve cash flow at reasonable, competitive rates.

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Invoice Factoring | Is it the best way for my business to leverage money?

Invoice Factoring is usually the first option considered by businesses looking to leverage future payments for their goods and services. However, there are many more routes to go down. The question then is, which is best for me? Invoice Finance is a broad term, put simply it is when a third-party company agrees to ‘buy’ your unpaid invoices for a price. These financiers can be commercial finance specialists or part of broader companies like banks and financial institutions. In recent times crowd sourcing platforms like Market Invoice have become popular. In the UK, there are broadly two types of invoice finance. These are Invoice factoring and Invoice discounting. It is also worth mentioning invoice trading which has witnessed considerable growth in recent times. It can be compared to crowd funding where high net worth individuals will be approached to provide finance, rather than traditional financial institutions. The easiest way to approach the different options is to take each in turn and look at the advantages and disadvantages to each. How does Invoice Factoring work ? This will usually involve an invoice finance company that provides management of the company’s sales ledger and any debtors in this. Sometimes called accounts receivable factoring, the financier will seek to collect the money on behalf of you from your client. Of course, the company’s customers will be aware that the business is using invoice factoring. Usually some understanding will be established between the invoice financier and the end clients accounts department. When an invoice is raised, the financier will ‘buy’ the debt that is owed by the end customer. A percentage of this is made available to the company with a day or two. Usually around 85% of the total. The invoice financier then has the responsibility to collect the full owed balance from the customer. Once this has been received the remaining balance is paid to the company minus an agreed percentage fee and ‘discount charge’. In the end the invoice factoring costs through these fees and charges will depend on the invoice finance company and how credit worthy the end customer is. Advantages of Invoice Factoring Collection of your sales ledger is essentially outsourced. This can free up much valuable time for businesses. The invoice financier has the responsibility to credit check customers so you are more likely to deal with ‘credit worthy’ clients. Disadvantages of Invoice Factoring It can be a disadvantage if you have a clientele that prefer to deal with your company directly. Like above, it could affect the image of your company as the factoring company may have a different approach to business than Invoice Trading Platforms Is like factoring however invoice trading will involve companies ‘selling’ their individual invoices to financiers. It’s a subtle distinction but the key difference is that invoice trading will uses online platforms as means to connect businesses with potentially investors. Thus bypassing the traditional financiers. You can think of it as peer to peer lending for invoice finance. Advantages of Invoice Trading Essentially you can pick and choose which invoices are offered for sale. You don’t need to outsource the debt collection for the complete sales ledger. With factoring companies, you usually do. This kind of invoice financing is ideally suited to businesses that deal with clients who demand longer credit terms. For example, let’s say most clients of a company are comfortable with 30-day net credit terms (underwritten by the company itself). However, one particularly large and powerful customer insists on 90 days as a pre-condition to doing business. It’s quite a long time to be without the cash. The company could use invoice trading for this customer to access the cash straight away. Disadvantages of Invoice Trading As with factoring company’s clients may prefer to deal with you directly. This could also affect your company image. Invoice Factoring vs Discounting With invoice discounting the invoice finance company will not manage the company’s sales ledger or collect owed invoices on their behalf. The invoice finance company lends the company money against the unpaid invoice. In most instances this is an agreed percentage of the total value. The service itself will often have a pre-arranged fee. The company still has the responsibility for collecting the owed debts with invoice discounting. Discounting can though be arranged confidentially so that the customer is not aware. In a lot of way this is a form of flexible financing like that of a bank overdraft. The business has access to short term cash that it can draw on when required. For this they pay a fee. Invoice Discounting advantages and disadvantages Advantages of Invoice Discounting Confidentially. Your clients do not have to know that you are borrowing against their invoices. Disadvantages of Invoice Discounting Responsibility still lies with the company for collecting debts.

INVOICE FINANCE AND INVOICE FACTORING EXPLAINED

How does Invoice Finance Work ? Cash is advanced to your organization via an invoice finance company. This is leveraged against the businesses outstanding invoices. It provides a practical way to direct funds into your business quickly. Invoice financing effectively advances you the majority of the invoice value. Typically a client could expect to get in excess of 80% of the total. The business would then receive the majority of the remaining balance at a later date, when your customer settles the invoice. It’s a great way to support your growing business and avoid cash flow difficulties by accessing your debtors. Will I be accepted ? Usually the criteria is that any organisation with a business to business model can be considered for invoice financing. As long as they have outstanding invoices due for collection. Lenders tend to focus on whether or not it is practical for them to finance your invoices. Revenue, age of company and profitability (whilst important) tend to be secondary. This is because legally the collateral for the loan is the actual invoice you send to your client. Most clients meet the below criteria….. Annual Revenue over 100,000 Satisfactory credit history More than 1 year in business. How much Invoice Financing can I get ? Generally speaking the total amount you can qualify for depends on how much your invoices are worth as well as their quality. Your credit score is also taken into consideration with many lenders and invoice financing companies ideally seeking to see a clear credit report before a decision is made. What documents do I need ? See the below list as an example of what may be required for an application….. Identification Outstanding Invoices Bank Statements Credit History What are the benefits of Invoice Financing ? It is a frustrating reality for most businesses that invoices will often not be paid on time. Just waiting the usual 30 or 60 day terms can be bad enough but delayed payments can bring a whole host of problems. When payments are late you can’t channel the working capital back into the company straight away. It a common problem for small businesses that can be solved with accounts receivable financing. With this service you don’t need to wait to get paid. You receive money for invoices straight away. Cash Flow Problems and Invoice Financing. The ability to guarantee funds for invoices straight away is a powerful tool for businesses. Whilst Invoice financing (or accounts receivable financing) can sometimes work out as quite an expensive way to fund your business activity, it gives you a more predictable cash flow. Often, particularly small and growing businesses will require urgent capital or need to cover recurring expenses like payroll and taxation. Capital may even be required for expansion or a new project. Invoice Financing can lighten the load with a reliable flow of cash into a company. Ultimately it gives owners and directors peace of mind so they can concentrate on business fundamentals. Whats the difference between Invoice Finance vs Invoice Factoring ? You may have heard of both of these as potential solutions to help business owners deal with cash flow problems. While both can help they are not the same thing. Invoice Finance Invoice Financing essentially works by you borrowing money against your outstanding invoices or accounts receivables. You, the business gets cash straight away with a commitment to pay the lender back plus fees and interest, when your client settles. The key here is that your business still has the responsibility to collect any owed money from the client. It’s best for businesses that need the money quickly but are also confident in collecting the invoice that is owed. Invoice Factoring Invoice Factoring is a little different. The lender will ‘buy’ the outstanding invoices that are owed. They then take responsibility for the collection of these invoices. The lender will first pay you a percentage of the total due invoice. Then once they have collected the complete balance they will pay you this minus an agreed percentage fee for the invoice factoring service. The key here is that your client will be dealing with an invoice factoring company to pay their bills. Not you. Invoice Factoring can benefit businesses that may be dealing with long payment terms, i.e 90 days. It’s also good for those who do not want to be recovering invoices by themselves. Also you have to be okay with what’s essentially a third party dealing with your customer. For more information on commercial invoice finance and invoice factoring please visit here. What do I do next ? We have many years experience in working with clients and Invoice Finance providers. We have the knowledge to tailor a package to meet clients longer term growth ambitions for their businesses. This expertise ensures the Invoice Finance facility is correct from day 1. This is not only true for new to Invoice Finance clients but also clients who are looking around if the current provider does not meet their needs. Here at Shortform via our broker contact with access to Invoice Finance providers there is a solution out there. Please feel free to contact by telephone or the online enquiry form and we can guide you through the process. ShortForm Business Consultants Ltd (Company Number 10428423) provide consultancy services on behalf of Empire Commercial Finance Ltd (Company Number 08798534). We are not a Broker or Lender.

Invoice Factoring | Is it the best way for my business to leverage money?

Invoice Factoring is usually the first option considered by businesses looking to leverage future payments for their goods and services. However, there are many more routes to go down. The question then is, which is best for me? Invoice Finance is a broad term, put simply it is when a third-party company agrees to ‘buy’ your unpaid invoices for a price. These financiers can be commercial finance specialists or part of broader companies like banks and financial institutions. In recent times crowd sourcing platforms like Market Invoice have become popular. In the UK, there are broadly two types of invoice finance. These are Invoice factoring and Invoice discounting. It is also worth mentioning invoice trading which has witnessed considerable growth in recent times. It can be compared to crowd funding where high net worth individuals will be approached to provide finance, rather than traditional financial institutions. The easiest way to approach the different options is to take each in turn and look at the advantages and disadvantages to each. How does Invoice Factoring work ? This will usually involve an invoice finance company that provides management of the company’s sales ledger and any debtors in this. Sometimes called accounts receivable factoring, the financier will seek to collect the money on behalf of you from your client. Of course, the company’s customers will be aware that the business is using invoice factoring. Usually some understanding will be established between the invoice financier and the end clients accounts department. When an invoice is raised, the financier will ‘buy’ the debt that is owed by the end customer. A percentage of this is made available to the company with a day or two. Usually around 85% of the total. The invoice financier then has the responsibility to collect the full owed balance from the customer. Once this has been received the remaining balance is paid to the company minus an agreed percentage fee and ‘discount charge’. In the end the invoice factoring costs through these fees and charges will depend on the invoice finance company and how credit worthy the end customer is. Advantages of Invoice Factoring Collection of your sales ledger is essentially outsourced. This can free up much valuable time for businesses. The invoice financier has the responsibility to credit check customers so you are more likely to deal with ‘credit worthy’ clients. Disadvantages of Invoice Factoring It can be a disadvantage if you have a clientele that prefer to deal with your company directly. Like above, it could affect the image of your company as the factoring company may have a different approach to business than Invoice Trading Platforms Is like factoring however invoice trading will involve companies ‘selling’ their individual invoices to financiers. It’s a subtle distinction but the key difference is that invoice trading will uses online platforms as means to connect businesses with potentially investors. Thus bypassing the traditional financiers. You can think of it as peer to peer lending for invoice finance. Advantages of Invoice Trading Essentially you can pick and choose which invoices are offered for sale. You don’t need to outsource the debt collection for the complete sales ledger. With factoring companies, you usually do. This kind of invoice financing is ideally suited to businesses that deal with clients who demand longer credit terms. For example, let’s say most clients of a company are comfortable with 30-day net credit terms (underwritten by the company itself). However, one particularly large and powerful customer insists on 90 days as a pre-condition to doing business. It’s quite a long time to be without the cash. The company could use invoice trading for this customer to access the cash straight away. Disadvantages of Invoice Trading As with factoring company’s clients may prefer to deal with you directly. This could also affect your company image. Invoice Factoring vs Discounting With invoice discounting the invoice finance company will not manage the company’s sales ledger or collect owed invoices on their behalf. The invoice finance company lends the company money against the unpaid invoice. In most instances this is an agreed percentage of the total value. The service itself will often have a pre-arranged fee. The company still has the responsibility for collecting the owed debts with invoice discounting. Discounting can though be arranged confidentially so that the customer is not aware. In a lot of way this is a form of flexible financing like that of a bank overdraft. The business has access to short term cash that it can draw on when required. For this they pay a fee. Invoice Discounting advantages and disadvantages Advantages of Invoice Discounting Confidentially. Your clients do not have to know that you are borrowing against their invoices. Disadvantages of Invoice Discounting Responsibility still lies with the company for collecting debts.

INVOICE FINANCE AND INVOICE FACTORING EXPLAINED

How does Invoice Finance Work ? Cash is advanced to your organization via an invoice finance company. This is leveraged against the businesses outstanding invoices. It provides a practical way to direct funds into your business quickly. Invoice financing effectively advances you the majority of the invoice value. Typically a client could expect to get in excess of 80% of the total. The business would then receive the majority of the remaining balance at a later date, when your customer settles the invoice. It’s a great way to support your growing business and avoid cash flow difficulties by accessing your debtors. Will I be accepted ? Usually the criteria is that any organisation with a business to business model can be considered for invoice financing. As long as they have outstanding invoices due for collection. Lenders tend to focus on whether or not it is practical for them to finance your invoices. Revenue, age of company and profitability (whilst important) tend to be secondary. This is because legally the collateral for the loan is the actual invoice you send to your client. Most clients meet the below criteria….. Annual Revenue over 100,000 Satisfactory credit history More than 1 year in business. How much Invoice Financing can I get ? Generally speaking the total amount you can qualify for depends on how much your invoices are worth as well as their quality. Your credit score is also taken into consideration with many lenders and invoice financing companies ideally seeking to see a clear credit report before a decision is made. What documents do I need ? See the below list as an example of what may be required for an application….. Identification Outstanding Invoices Bank Statements Credit History What are the benefits of Invoice Financing ? It is a frustrating reality for most businesses that invoices will often not be paid on time. Just waiting the usual 30 or 60 day terms can be bad enough but delayed payments can bring a whole host of problems. When payments are late you can’t channel the working capital back into the company straight away. It a common problem for small businesses that can be solved with accounts receivable financing. With this service you don’t need to wait to get paid. You receive money for invoices straight away. Cash Flow Problems and Invoice Financing. The ability to guarantee funds for invoices straight away is a powerful tool for businesses. Whilst Invoice financing (or accounts receivable financing) can sometimes work out as quite an expensive way to fund your business activity, it gives you a more predictable cash flow. Often, particularly small and growing businesses will require urgent capital or need to cover recurring expenses like payroll and taxation. Capital may even be required for expansion or a new project. Invoice Financing can lighten the load with a reliable flow of cash into a company. Ultimately it gives owners and directors peace of mind so they can concentrate on business fundamentals. Whats the difference between Invoice Finance vs Invoice Factoring ? You may have heard of both of these as potential solutions to help business owners deal with cash flow problems. While both can help they are not the same thing. Invoice Finance Invoice Financing essentially works by you borrowing money against your outstanding invoices or accounts receivables. You, the business gets cash straight away with a commitment to pay the lender back plus fees and interest, when your client settles. The key here is that your business still has the responsibility to collect any owed money from the client. It’s best for businesses that need the money quickly but are also confident in collecting the invoice that is owed. Invoice Factoring Invoice Factoring is a little different. The lender will ‘buy’ the outstanding invoices that are owed. They then take responsibility for the collection of these invoices. The lender will first pay you a percentage of the total due invoice. Then once they have collected the complete balance they will pay you this minus an agreed percentage fee for the invoice factoring service. The key here is that your client will be dealing with an invoice factoring company to pay their bills. Not you. Invoice Factoring can benefit businesses that may be dealing with long payment terms, i.e 90 days. It’s also good for those who do not want to be recovering invoices by themselves. Also you have to be okay with what’s essentially a third party dealing with your customer. For more information on commercial invoice finance and invoice factoring please visit here. What do I do next ? We have many years experience in working with clients and Invoice Finance providers. We have the knowledge to tailor a package to meet clients longer term growth ambitions for their businesses. This expertise ensures the Invoice Finance facility is correct from day 1. This is not only true for new to Invoice Finance clients but also clients who are looking around if the current provider does not meet their needs. Here at Shortform via our broker contact with access to Invoice Finance providers there is a solution out there. Please feel free to contact by telephone or the online enquiry form and we can guide you through the process. ShortForm Business Consultants Ltd (Company Number 10428423) provide consultancy services on behalf of Empire Commercial Finance Ltd (Company Number 08798534). We are not a Broker or Lender.

Description of the Service

At Catalyst, we specialize in invoice factoring, also known as accounts receivable financing which helps businesses that don't meet the requirements for a traditional line of credit. We can help you significantly improve cash flow at reasonable, competitive rates.

Price of the Service

Price not indicated

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