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Invoice factoring Company

I quite often speak to businesses who are considering whether to use invoice finance or an overdraft. They will usually ask which is the cheapest.

In short an overdraft is almost always cheaper than an invoice finance facility. I have read on other websites that the interest rates are lower for an invoice finance facility than they are for an overdraft and I would agree. However, the interest or discounting fees on an invoice finance facility is dwarfed by the service fee costs. By way of a simple comparison an overdraft may attract a 1% arrangement fee so for a £100,000 overdraft the arrangement fee is £1,000. This is compared to a £100,000 invoice finance facility where a 1% service fee could be levied against the gross turnover of the business. If the VAT inclusive turnover is £1m then the annual service fee is £10,000.

So is an overdraft cheaper? Typically yes.

So why would a business use an invoice finance facility? In short because an overdraft is not available. Banks no longer secure overdrafts by way  debenture where the major asset is the debtor book.

Therefore for many businesses an invoice finance facility is the only option. If you are one of these businesses looking for a working capital facility to ease cash flow pressures it is important to consider your options. Whether you are factoring or invoice discounting it is important to remember that the lenders are not the same. They all have very different capabilities, criteria and pricing structures.

Factoring in London is available from several companies. The London office of Smart Factoring Quotes based in York Street is well placed to advise any company on the invoice factoring and invoice discounting options available to them.

As a London based company looking for factoring you have access to the factoring arms of the major banks along with the London based independent invoice finance companies. This includes most of the major players. Importantly you also have access to the independent factoring companies from outside London. There are some great offerings from companies based in the North such as Manchester and Leeds but also from independents based in the South East and the South West such as Bristol.

The geography of your provider should not be a major consideration. Far more important is the ability of that lender to meet the unique requirements of your business. With any type of invoice finance facility, whether it be invoice discounting or factoring the structure of the facility is everything. It will determine how well it will work for you. Pricing is obviously important but should always be second to structure.

Factoring Newcastle – if you are looking for a factoring company in Newcastle it is worth speaking to Smart Factoring Quotes. With an office in Ryton Village in the Tyne Valley we are well placed to visit you, understand your requirement and provide true independent advice as to which lender can truly deliver a cash flow solution for your business.

If you are a business in Newcastle looking for invoice factoring or invoice discounting get in touch today. Our approach is as follows:

  • We aim to fully understand your business and your requirements
  • We work with you looking at your processes to ensure you have the best chance of securing the facility you require
  • Our knowledge of the market means that you only end up speaking with lenders who can genuinely assist your business
  • We save you both time and money
  • We ensure the facility is structured in a manner that meets your needs
  • We fully explain all the costs and risks involved
  • There is no hard sell – we simply aim to explain your options and allow you to make an informed decision

Our service is focused on what you actually want rather than trying to force any particular product or structure upon you.

Make us your first port of call and we will gladly visit you to discuss your requirements.

Invoice factoring in Scotland is readily available. Scotland has several dedicated invoice finance providers but also has the opportunity to deal with several lenders south of the border. Scottish lenders include the major Scottish banks and also in Scotland are a few independent providers who actively targets businesses in Scotland.

At Smart Factoring Quotes we have experience of arranging both factoring and invoice discounting facilities in Scotland. Our most recent transaction was for a taxi company that was providing a service to local authorities and invoicing on credit terms.

We are aware of the issues surrounding Scottish registered companies and the laws pertaining to debentures. This means that we can introduce the lender that is best suited to meet your needs.

In terms of costs we understand each lenders capabilities and criteria and we aim to ensure that we set up a facility that is both properly structured and cost effective.

Easy Invoice Finance are a small independent factoring company based in the North West.

My understanding is that they are part owned by Regency Factors and part owned by Rob Mercer who fronts the business.

They are commercial in terms of their underwriting and aim to be quick in their decision making.

If you would like to speak with Easy Invoice Finance or you are looking for a factoring facility it is worth speaking to Smart Factoring Quotes first for some independent and impartial advice.

Invoice finance companies place huge importance on a businesses audit trail.  The audit trail ensures that the debts are secure and provable.

If you are looking for an invoice finance facility it is important to look at your business and how robust the audit trail is.

Each business will have it’s own quirks and characteristics. As such you will have to focus on finding ways to implement a suitable audit trail.

By way of examples let’s have a look at some traditional robust audit trails that invoice factoring companies expect to see in place.

Wholesalers

  • Purchase order
  • Proof of delivery (signed by recipient)
  • Invoice

Temporary Recruitment

  • Agreed rates
  • Purchase order
  • Signed timesheet
  • Invoice

Design Agency

  • Brief supplied by customer
  • Quote
  • Acceptance
  • Work is submitted
  • Signed satisfaction note (this eliminates queries down the line)
  • Invoice raised

The better your invoice audit trail the better. Importantly you need some kind of 3rd party sign off by way of a signed proof of delivery, signed timesheet, signed satisfaction note.

This may seem like additional administration but it is key to sourcing a facility and it is a good step for your own internal procedures.

Pulse Cashflow and an independent provider of cashflow solutions. If you are looking for a provider such as Pulse Cashflow it is worth speaking to Smart Factoring Quotes to establish who is the most suitable and most cost effective lender for your business.

Pulse offers three main products.

  1. Turnaround Pulse – aimed at struggling businesses who perhaps cannot get a facility elsewhere.
  2. One Pulse – this provides finance against single invoices
  3. Small Pulse – aimed at businesses with a turnover less that £250,000

Pulse Cashflow claims that if you have a good sales ledger then they can provide your business with funding. Typically the businesses Pulse Cashflow target will have been turned down for finance elsewhere and as such will have financial problems or a poor credit history.

Pulse Cashflow’s charges reflect the risk related to the deals they are doing and I think that is fair enough. If they can provide finance that allows a business to turnaround then they are providing a valuable service. If they are lending in areas others won’t they also deserve their premium.

However, business owners need to be honest with themselves. They need to understand the charges and make sure that their business is viable with the facility in place. It is also important to understand the obligations of the business and any potential liability of the directors or business owners.

How long does it take to put in place an invoice finance, invoice factoring or invoice discounting facility?

Well the flippant answer is ‘how long is a piece of string?’ However, that helps nobody. On average I would say it takes 3 weeks but I have seen it done in 2 days. While the broker and factoring company plays a very big part in the process it does rely heavily on the requirement and the information that the prospect can provide.

I remember looking at an ‘urgent requirement’ last May and advising we could have a facility in place for the ‘following friday’. While we had everything in place the prospect simply let everyone down by not being able to supply simple information – such as a copy of his passport. This rumbled on until October!!

The flip side of this is a prospect that phoned me on a Saturday evening advising he needed a £1.7m facility in place by the Wednesday. I advised him everything I would need and I had it on Sunday morning. The facility was in place to meet his deadline.

The other key things to achieving a quick turnaround is a) knowing which invoice finance company can meet your needs and b) knowing which person within that company to speak to.