Features
The features of Factoring & Discounting include:
Improved
Cash Flow
A better cash flow helps to save time and money, leads
to greater profits and increases confidence in future
planning.
Flexibility
Factoring/Discounting is one of the most flexible forms
of finance available to business, as the available funds
increase with the value of the credit-approved invoices.
Costs
Factors/Discounters usually charge a service fee plus
interest on funds utilised. The fees depend on volume
of sales and the level of services that are provided.
Collections
With its professionalism and weight in the marketplace,
a Factor can often collect debts more quickly and effectively
then a small independent business.
Credit Management
The Factor/Discounter can provide the business with regular,
up-to-date informatiom on the status of its sales ledger
and the performance ofits trade debtors.
Credit Protection
The Factor/Discounter undertakes credit checks on the
business's debtors and may set a rate for credit protection
under a non-recourse arrangement. The Factor/Discounter
will pay the business, regardless of whether the invoice
has been paid.
Credit Assessment
A Factor/Discounter has access to credit reference databases
that many businesses may not be able to afford. A Factor/Discounter
can advise the business on the credit-worthiness of current
and potential debtors.
Potential cost savings from Factoring/Discounting include:
- cost
of bank overdraft
- fewer bad debts
- costs of account management, administration
and credit control
- no need to offer discounts to debtors
for early payment
- management time can be devoted to other
aspects of the business
- discounts from suppliers for early
or prompt payment.
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