0845 643 9485
Call now for expert advice

General

Temporary Recruitment companies will often use some form of factoring or invoice discounting. It is almost a necessity in terms of how their cash flow works. Typically they are invoicing clients on 30 day terms and yet they are having to pay wages on a weekly basis.

A factoring agreement can provide up to 90% of the invoice value the day after the invoice is raised. This means that wages are covered and you don’t have to worry about waiting for clients to pay.

As an alternative to temporary recruitment factoring there are also full back office solutions that will take care of almost everything except finding clients and temp staff!!

If you are looking for a funding solution for your temporary recruitment company it is worth speaking to Smart factoring Quotes to fully understand what your options are. Smart Factoring quotes have helped to source facilities for temporary recruitment companies who are new starts all the way through to companies with turnovers in excess of £50m.

Spot factoring seems to be gaining popularity within the UK and is a fairly common procedure in the US. We are talking about factoring a single invoice as opposed to factoring whole turnover as you would with a traditional factoring facility.

Obviously if you have an ongoing requirement to factor each invoice or the majority of your invoices it makes sense to seek a suitable factoring facility.

However, if you are looking for a short term solution to a cash flow “hiccup” then spot factoring can be ideal. It means that you can factor a single invoice and once that is paid you have no contractual obligation. You can also revisit the “facility” further down the track if you have another invoice you wish to factor. In essence you can “dip in and out” as you need to.

This can be quite attractive to some businesses. So what are the down sides?

In short the interest rates can put some people off. Most lenders will quote a daily interest rate which sounds nominal. However, this can equate to an APR of circa 80%. But does this make it more expensive than traditional factoring?

Well the interest rate is 10 – 20 times more than what you will pay on a traditional factoring facility but your debt may only be outstanding for 30 days. Traditional factoring can attract minimum service fees and minimum contract periods which can mean if you have a genuine short term requirement traditional factoring can be expensive.

While rates for spot factoring may well be higher than the rates for whole turnover factoring, if you have a genuine short term requirement spot factoring will typically be your cheaper option in terms of pounds and pence!!

So is it the future? I am not sure but it is another valid solution for many businesses so it should be embraced.

Invoice Finance is available in Newcastle from a large selection of lenders.

The challenge is to find the best lender to meet the needs of your Newcastle based business.

This will depend on a large number of factors including your financial status, turnover, sector, how you raise invoices and who your customers are. Each invoice finance company has their own individual criteria and characteristics and because of this there will be on particular lender who is best suited to meet your needs.

Smart Factoring Quotes understand each lenders criteria and capabilities. This allows us to source the best possible facility for your business.

We have recently been approach by several businesses in and around Birmingham who are looking for factoring facilities. Being based in Birmingham has some serious advantages as it means that virtually every factoring company in the UK can service businesses there as they are so central in terms of location.

The challenge for any business based in Birmingham is choosing the right lender. Not all factoring facilities are the same – far from it. As most require a contract to be signed it is important you choose the right factoring facility and lender.

Invoice finance companies each have their own target market and this will be based on business turnover, sector, geography, debtor profile, etc.

Smart Factoring Quotes were approached by a residential care provider just outside Glasgow.

They were keen to source factoring Scotland. They were paying staff on a weekly basis but were having to wait a considerable amount of time to get paid by the local authorities.

We explored several options for them including full factoring, CHOCS and invoice discounting. As the credit control was not really an issue they decided that factoring was not good value as they were paying for a credit control service they just did not need.

We were able to source an invoice discounting facility that was much cheaper but still met all their requirements.

We have a lot of clients in Scotland and have an excellent network of lenders covering Scotland.

Fixed fee factoring is ideal for businesses looking for a single flat monthly fee when factoring.

Research has shown that small businesses find factoring charges confusing and unpredictable. Fixed fee factoring takes away this confusion by combining all the charges into an easy to understand single monthly factoring fee. It is easy to budget for and provides a valuable boost for the cash flow of a small business.

It is ideal for a business with a fairly smooth cash flow. However, if your turnover is more variable you could find yourself paying the flat monthly fee in a month where you have not had any turnover in which case you would be paying for nothing.

An alternative to fixed fee factoring could be a bundled fee deal. This is a single fee but is charged as a percentage of each invoice with no minimum fees. It is arguably as easy to understand as a fixed fee deal but is more flexible.

Invoice finance is a form of finance that can provide valuable working capital to your business. I want to explore objectively the advantages and disadvantages of invoice finance.

Advantages of invoice finance

  • invoice finance can provide up to 90% of the value of your sales ledger and ongoing invoices as cash to use within your business.
  • this may allow you to take advantage of settlement discounts
  • if you use factoring you can outsource the credit control of your business freeing up more time to concentrate on growth
  • by taking up credit protection you can eliminate the risk of bad debts
  • an invoice finance facility should grow in line with your sales

Disadvantages of invoice finance

  • an invoice finance facility can be costly when compared to an overdraft facility. However, this is not always a real option.
  • some people perceive factoring as losing control of your sales ledger rather than outsourcing.
  • some people also feel that there is a stigma attached to factoring
  • you can be tied into lengthy contracts and notice periods which can be restrictive
  • hidden costs or at least costs beyond the headline rates can cause frustrations
  • retentions and other restrictions on the funding can also mean that the true prepayment level is not what is expected or anywhere near the headline rate

I believe that an invoice finance facility can work very well in the right circumstances. However, it is important to understand exactly what is on offer. hat means you must understand the total costs involved and also the mechanics of calculating the cash made available.

Active Sports Bras are due to launch their specialised online store selling top branded sports bras in January 2012.

Funding Solutions UK Ltd have been working hard with Active Sports Bras to ensure the necessary funding is in place to launch a top quality e-commerce site and to purchase the required stock.

Active Sports Bras are aiming to do the following:

  • provide top quality sports bras at discounted prices by maintaining very low overheads and passing on those savings to customers
  • encourage women to return to sport through the use of incentives and social media

It looks like a great opportunity to support women in sport and the ability to pass on substantial saving should ensure a loyal following.