Invoice Discounting

Time to Fill the Funding Gap

Time to Fill the Funding Gap

For a small or medium sized enterprise to survive, funding is essential.  New start-ups need the capital to first establish themselves, whereas those further down the line may need income to stabilise the business or to grow and expand into new markets. Many look to the banks to provide this funding however, in the current economic climate, many banks are not providing lenders with the capital they need to make a success of their venture.  For example, in the second half of 2011, more than 60,000 loan and overdraft applications from small and meduim enterprises worth as much as £3bn were rejected by the high street banks. Alternative forms of finance If small and meduim enterprises are struggling to secure finance from traditional lenders, it follows that in order for them to survive they ... »

The Difference between Factoring and Invoice Discounting

The Difference between Factoring and Invoice Discounting

Both factoring and invoice discounting are financial services that enable businesses to release the funds tied up in unpaid invoices. Both involve a third party company advancing money against outstanding debtor balances. There are clear differences between factoring and invoice discounting: With factoring the third party company takes control of the sales ledger, chasing customers for settlement of invoices and managing the credit control of the business. They are also responsible for processing the payment of invoices, meaning that your customers are fully aware of your business contract with a factoring company. With invoice discounting your customers are unlikely to be aware of your relationship with a financing company. You maintain responsibility for the sales ledger, payment chasing... »

Alternative Finance Provides Comfort for SMEs

Conventional bank loans, often seen as the traditional option for raising business finance, are being ignored by small and medium-sized businesses due to worries about restrictive eligibility criteria and the wide range of other finance options available, says Bibby Financial Services. Although statistics from the CBI show that bank lending to businesses increased in November 2009 for the first time since January 2009, lack of access to finance over the course of last year saw many businesses turn to other options. Research Bibby Financial Services carried out into the financial intermediaries sector in 2009 found that the question of raising finance is a key concern for four in 10 small and medium-sized businesses but, more alarmingly, three-quarters (74.3%) had found that stricter bank l... »

Debt Factoring and Invoice Discounting

Financial services companies that provide businesses with debtor finance, secured against unpaid invoices are known as Factors and Invoice Discounters. Factors buy your trade debts and typically will pay 80% to 85% as soon as they receive a valid copy invoice. The balance, less charges, is paid when the customer pays. The Factor collects the debt from your customer directly but will usually agree collection policies with you, in order to ensure faster customer payment without loss of goodwill. Some Factors also provide bad debt insurance. With invoice discounting responsibility for collection of debts remains with you and the service is normally undisclosed to customers. Payments that you receive are paid into a bank account administered by the Invoice Discounter and you are then credited ... »