Telephone: 0151 - 651 2000
Fax: 0151 - 651 1600
Mobile: 0771 - 866 1000
e-mail: info@addiswalker.co.uk
We assure your confidentiality at all times.

Debtor Book Factoring

Debtor book factoring, also known as "Cash For Receivables," is the conversion of a business's accounts receivable into immediate cash, by the outright, discounted purchase of its receivables, by a factor, a finance company or a bank.

Factoring is not a loan and is not based on a business's ability to repay any of the financial advances.  The length of time in business is not a consideration, neither is the debt to equity ratio. Instead, it is based on the ability of your customers to pay what they owe.  Once a factor purchases the receivable invoices, they assume the responsibility for its collection. The factor is also responsible for the management of the Sales Ledger, including credit investigation, accounting and bookkeeping.

As compensation for these activities, the factor purchases the receivables at a discount. The discount fee usually depends on, the amount purchased, the credit worthiness of the debtors and the turnaround time for payment to be received. Fees can vary substantially but are usually less than many business owners would expect for the quality of the service they receive.

Commercial Banks simply cannot provide all the funding required by expanding companies, the balance sheet may not be liquid or the company may be failing to clear the bank debt as per their agreement. As solutions to these problems, a factor can provide funds to clear bank loans periodically, or alternatively make additional bank credit available by guaranteeing accounts or replacing accounts receivable with cash. Most 'SME' Businesses have difficulties with collecting cash from the debtors.

Once a factoring contract is entered into, you will submit invoices to the factor for onward submission. The factors credit department becomes your credit department. Once the invoice is approved, you will receive up to 80%, or even 90% of the proceeds within two to three days.  The remainder will be retained by the factor, as a reserve to protect against loss from complaints and returns, since the factor would have purchased the accounts without recourse. Usually, the factor will settle the account each month and will pay the proceeds due, less cash discount. 

One of the biggest advantages of factoring is your business can receive immediate cash within two to three days, enabling the acceleration of cash flow, by speeding up payment of your Sales Invoice.

You will have an immediate source of funds for operating expenses and future business growth. You will be able to use your own hard-earned cash without having to wait 30, 60, 90, 120 days or even longer, to collect from your customers. Additionally, since only receivables are used as collateral for the cash advance, other assets (such as commercial property, other equipment and vehicles) can be used for future borrowing. 

Cashflow is probably the most important element int he success of a business and it is considered to be the lifeblood!!

The value of their sales ledger could be one of the largest entries on the company's balance sheet.This also represents the business's easiest source of working capital and in many cases this security is simply not being used. A business can create immediate cash-flow raising 70% to 80% of the face value of the sales invoices within 24 to 48 hours. Invoice finance will accelerate cash-flow by speeding up payment of the receivables. Additionally since only receivables are used as collateral for the cash advance all other assets such as property, plant & equipment and vehicles etc. can be used as a line of security for future borrowings. By eliminating the time delay between invoicing and getting paid a business can quickly become cash positive.

A Business Finance Consultant (BFC) can help you determine if factoring your company's accounts receivable is the right option for you. Once you have decided to take advantage of this form of financing, your BFC will package the transaction in accordance with factor's requirements. The BFC will select a wide variety of investors in order to identify the correct match for your company.

Whether your business is a start-up or has simply out grown the general cash flow, a Business Finance Consultant can help you to factor your invoices and get the cash your company requires quickly and efficiently.

 
Fast Contact
Your name:  
Telephone number:   
Fax Number: 
e-mail Address:  
Your message: 
 
Write the characters in the image above  


 About Us | Privacy | Legal
Copyright Addis, Walker & Co 2007