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Stories Tagged ‘Invoice Factoring Companies’

We are often approached by companies looking for factoring companies in Leeds.

This request usually comes from companies who are in and around Leeds and want a local provider. Fortunately there are a good choice of factoring companies in and around Leeds. The right one for you will depend on the size of your business, your sector and your financial performance.

There are also a large number of factoring companies outside Leeds who are happy to help Leeds based businesses with a factoring facility.

Smart factoring Quotes would be delighted to help you find a suitable provider.

When looking for factoring advice I am always amazed at who people approach. I accept that my views may be tainted somewhat as I am a factoring broker but it is what I specialise in and I know and am 100% impartial.

Let’s have a look at who business owners will approach to obtain a recommendation for factoring:

Bank managers – your bank manager will only ever recommend their own bank’s factoring company. They are heavily targeted to sell this product so you will receive a single recommendation not taking into account what your requirement is or what the market can offer. In contrast a factoring broker can look at your requirement and recommend the lenders best placed to meet your needs.

Accountants – unfortunately a lot of accountants take commissions from invoice finance providers (as do invoice finance brokers) The problem is that accountants do not specialise in setting up invoice factoring facilities and often do not look at it as in depth as they should. They will also have a few localised relationships rather than using the whole market.

Brokers owned by factoring companies – some brokers are actually owned by factoring companies. As such guess who they are most likely to recommend? If you are using a broker at least ensure they are independent and impartial.

Brokers owned by insolvency practitioners – this may seem like a strange relationship but insolvency practitioners are keen to be appointed by factoring companies. If they can offer factoring companies new business they are likely to receive more appointments. As such you could find yourself placed with a factoring company they owe a favour to rather than the one best placed to meet your needs.

In my opinion you should be taking factoring advice from a specialist and someone who is 100% impartial and independent.

There are a lot of good brokers in the market who are specialists and totally impartial.

At Smart Factoring Quotes we are totally independent and impartial. We are also specialists as invoice finance is all we do.

We have recently assisted a company in Manchester arrange a factoring facility.

Our client is a security company with a single debtor. While paying wages weekly they were only getting paid monthly at best by their customer who was a larger security company based in Birmingham.

We used a Manchester factoring company because the requirement was urgent so they could react quickly. We knew which local lenders could assist a security company with a single debtor.

The solution was implemented quickly to the satisfaction of our client.

 

Factoring agreements are typically for 12 month periods with either a 3 month or 6 month notice period.

However, there are companies offering factoring with no minimum contract.

You could opt for a trial period, a rolling 28 contract or a rolling 3 month contract. Smart Factoring Quotes can help you access all these types of agreements.We will also explain in full the fee structure so you have a full understanding of what you will be paying.

We understand the invoice factoring market and all that it can offer. We also understand the frustrations that businesses face when looking to set up these agreements. We understand how to get you the invoice finance facility that you want.

Trade finance facilities such as a letter of credit combined with a factoring facility can provide an ideal solution for importers. This combination can allow importers who take confirmed orders from reputable customers to pay their supplier. By funding the full trade cycle it allows them to raise finance from order right through to when their customer pays.

How does this work?

  • The importer receives a confirmed order
  • They place that order with their supplier
  • A letter of credit is raised in favour of the supplier
  • Good are shipped and when received the supplier receives payment from the LC
  • Goods are delivered and an invoice is raised
  • The factoring facility repays the LC
  • When the customer pays the factoring facility is repaid

Requirements:

  • A confirmed order
  • from a credit worthy customer
  • usually a 20% profit margin is required

Security

Some banks require tangible security in the form of cash cover or a charge on property. However, within the market there are lenders who will happily raise an LC on the back of a confirm order.

Cheap factoring for small businesses is now available. Typically the minimum fees levied by lenders made factoring particularly expensive for small businesses with a turnover less than £500,000. Some may argue that there is no such thing as cheap factoring no matter how big your business is but I believe that a cost effective solution now exists.

At Smart Factoring Quotes we have a bundled fee solution which means that you pay one simple fee as opposed to a seperate service fee and discounting fee. For a recourse factoring facility this fee is 1.95% of the each invoice. If you wish to include credit protection to protect you against bad debts this fee increases to 2.95%.

This has been well received by virtually all small businesses that I have spoken to. The benefits include:

  • up to 85% prepayment against your invoices providing valuable working capital for your business
  • no minimum fees which can prove expensive when turnover dips
  • easy to calculate fees which can easily be priced into your product or service price
  • optional credit protection to protect you from bad debts

Typically my advice also includes an explanation about hidden costs as detailed in other posts on this forum but with this facility it is easy to use, transparent and easy to understand.

Selective factoring was recently set up by Smart Factoring Quotes for a security company based just outside Chester in the North West of England. They had landed a large contract worth over £400,000 over 3 months. They had to invoice monthly on 90 day terms and yet they were paying their security staff weekly.

They approached with a view to spot factoring the 3 individual invoices. We looked at their options and found that selective factoring was by far and away a cheaper option. Selective factoring means that you factor all the invoices of a particular debtor whereas spot factoring means you can pick and choose individual invoices. The difference in this instance is subtle but the difference in cost was dramatic.

Selective factoring worked out almost 10 times cheaper in this instance. The facility will allow our client to take on a lucrative contract and meet it’s weekly wage demands. Profits will be increased because of the selective factoring facility.

Smart Factoring Quotes are proud to announce the launched of their new and improved website.

Our aim has always been to provide business owners with a balanced view on invoice finance. The new site is more informative and we want to be the preferred source of online information for business owners looking for an invoice finance facility. We want to empower business owners to make an informed decision. That informed decision can be about choosing whether or not to use a form of invoice finance, which facility to use or which lender has offered the most competitive terms for their business.

If you are a business owner who is considering entering into an invoice finance agreement or reviewing your existing arrangements make Smart Factoring Quotes your first port of call.

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