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Guide to Factoring
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Guide Contents

Factoring
Key Features of using a Factor
Finding a suitable Factor
Frequently asked questions about Factoring
Where to get more help and advice about Factors

Factoring

What is Factoring?

Factoring is a service, provided by companies who are known as Factors, which free up cash flow for businesses. Factors simply provide an agreed amount of money in return for a company’s invoices. The Factor then receives the payment in full from the invoices.

As this is a financial arrangement it is wise to show all documentation to your solicitor before committing to a contractual agreement.

Factors usually keep an agreed percentage of the invoice and a fee for the service. It can be seen as a win-win: the company receives regular prompt payment for their invoices, albeit a reduced amount, without the hassle of chasing outstanding accounts and the Factor makes money when the invoices are paid.

The benefits provided by a Factor may include:

  • Better cash flow
  • The responsibility of chasing payment is passed to a third party
  • Quick release of cash
  • Reduction in administrative costs


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