Factoring & Invoice Discounting

Factoring/Invoice Discounting, also known as Debtor Finance, is a funding option available to companies that provide a product or service on credit terms to their customers. The purpose of the finance is to give you access to immediate funds, without having to wait for the customer to pay the invoice. This is particularly beneficial to those of you who are in a growth period and committing more working capital to customer credit/debtors.

The company lending you the money will agree that for all invoices raised you will have available 80-85% of the value of the invoice at your disposal. You do not have to take available amounts. The cost structure is similar to that of an overdraft: you pay a service fee and an agreed percentage above bank base rate, calculated on the amount of funding you require and the length of time your customer takes to pay the invoice.

There are two types of lending:

The 'factor' (the lending company) is disclosed to all of your customers, with your customers paying the factor direct. The collection/credit control/credit management is the responsibility of the factor (you have some control, but not a lot). The factor will collect all amounts due and offset this amount against your account. The balance of the invoice (15 - 20%) will be paid into your account, less the fee and interest.

2. Invoice Discounting

Depending on the amounts involved, the invoice discounter (factor) will not be disclosed to your customers. You collect on your debtors, then pay the factor.

Can Factoring/Invoice Discounting work for my business?

We at OzWealth Finance can help you with information, guidance and services to assist you in financing your company debts and improving your cash flow with Factoring & Invoice Discounting.

It's true, and well documented, that not every business can approach any lender, but sometimes we impose our own restrictions on who we think would actually lend to us - the biggest example: Factoring (where cash advances of up to 90% of an invoice value can be obtained immediately) is perceived to be for established companies only.

Not many business owners would turn to a factoring company if the bank refused to increase an overdraft, but it is also for this reason that the factor exists. Further, should you be initiating or extending credit terms to your customers, your bank will consider this a risk where the factor considers this as normal trading conditions.

Factoring is also perceived as being for 'solid' businesses with good years of trading, not so. Factoring is as much for the growing company with cash flow problems as it is for well run solvent concerns.

So, if you feel that this service will assist you in financing your business and could make an immediate impact contact us now.

Click on these links below for more information on Business Finance...
Commercial Property Loan
Business Loans
Asset Based Lending
Equipment Finance

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