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Guide to Factoring

Key Features of using a Factor

Level of Factor Intervention Features Benefits
Re course factoring
  • Factor provides part payment for the invoice
  • Factor attempts to get full payment for invoice and pays you the remainder minus their fees
  • Liability remains with company, meaning if invoice remains unpaid the advanced payment made by Factor must be repaid and debt remains outstanding on the company accounts
  • The company receives advanced payment from Factor which improves immediate cash flow
  • The company retains large amount of control over accounts
  • One of the lowest fees for using a Factoring company
Non re course factoring
  • Factor provides agreed amount for invoices
  • Invoices are raised by company
  • Invoices are paid directly to the Factor
  • Factor takes full liability
  • Factor can take any legal action required to recover the debt
  • Reduces time spent chasing outstanding payment
  • Improved cash flow
  • Factor take full responsibility for payments so if the invoice isn’t paid you are not required to repay the amount paid to you via the Factor

It is important to choose a suitable Factor as they will be dealing with your customers on your behalf. It maybe advisable to discuss the methods used to collect the debts outstanding making sure that you and other company directors are comfortable with the measures taken. This may have an impact on your working relationship with your customers.

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

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