Factoring is a valuable source of Factoring is also an opportunity to outsource the credit control function of the business. This ensures that the debts are collected in a methodical and effective manner which reduces your borrowing costs and reduces the risk of non payment.

The credit control does mean that factoring is more of a service than a finance facility and as such can differ dramatically from lender to lender.  Factoring companies will use a variety of methods to chase outstanding debts. Some invoice finance lenders offer the most basic service of  sending out automated letters and statements which in itself is at least a methodical approach which should produce satisfactory results. Other companies will add to this basic service and will telephone each debtor to chase the outstanding invoices. This more hands on approach should be more effective and will allow disputes to be highlighted quickly.

It is important when comparing quotes to establish what service you are receiving for your money.

Factoring also offers an advantage to a lender over an invoice discounting facility. Over and above the additional income generated by a factoring facility it also reduces the risk of a lender. They are closer to your customers and in the event of failure the invoice factoring company is better placed to collect the debt as they have always been actively involved. By having contact with customers they can also verify that invoices are genuine and the risk of fraud is reduced.

So factoring offers benefits to both invoice factoring companies and borrowers alike.