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What is Invoice Factoring?
Invoice factoring is a flexible financial solution designed to help Small and Medium-sized Enterprises (SMEs) in a variety of sectors overcome cash flow challenges and grow with confidence. Factoring providers work by converting unpaid invoices into immediate cash, giving your business access to up to 90% of the invoice value right after it’s issued. This means you no longer have to wait for customers to pay, closing the gap between making a sale and receiving payment.
Invoice factoring companies will also simplify your operations by taking over the management of your sales ledger. They handle essential debt collection tasks, such as issuing statements, sending follow-up reminders and contacting customers who are late on payments. By outsourcing these tasks, you can focus your time on growing your business rather than getting bogged down in admin.
Interested in reducing your workload and improving your cash flow? Contact us today to explore how Pathfinder Invoice Finance can support your business growth.
Benefits of invoice factoring
Benefits of Invoice Finance
- Provides immediate working capital
- Resolves cash flow concerns
- Facilitates business growth
- Allows you to focus on income generation rather than administration
- Relieves the burden of managing ledgers and chasing payments
- Helps secure supplier discounts by enabling early payments
Factoring Simplified
- Receive a high proportion of your invoice values as soon as they are raised
- All sales ledger administration and payment collections are managed on your behalf
- Enables you to concentrate on business development
- Enjoy a tailored service designed to suit your customers’ needs
Unlock Your Business Potential
- Utilise cash from invoices for a variety of business purposes
- Benefit from funding that provides stability and drives growth
- Free up the necessary cash flow and working capital to achieve your goals
- Gain more time to focus on running and expanding your business
Invoice Factoring vs Invoice Discounting
Invoice factoring and invoice discounting are both services that allow businesses to access funds tied up in unpaid invoices, but they differ in the level of control given to the provider, the advance rates they provide and the fees they charge.
Ledger Management: Invoice factoring lenders will manage your sales ledger; chasing payments, sending reminders and contacting customers who are late paying an invoice. With a discounting provider, you’ll maintain full control of your ledger and customer communications.
Advance Rates: Since you’re still responsible for collections, discounting providers may offer a higher advance rate than invoice factoring companies, often up to 95%.
Cost Structure: Factoring services may be a more convenient option, but they typically come with higher fees. Invoice discounting will generally have lower fees, but will require more administration on your part.
Costs to be Aware Of
When considering invoice factoring or discounting, it’s important to be aware of the potential costs involved to make sure you choose the best solution for your business.
- Interest Rates: The provider may charge interest on your advance, which can vary based on your business’s financial stability and the invoice amounts.
- Service Fees: This can include a percentage of the invoice value, typically charged for managing the sales ledger and general administrative tasks.
- Other Charges: Some invoice factoring companies may charge setup fees, transaction fees or fees for late payments by your customers.
To discover for yourself how a factoring solution from Pathfinder Invoice Finance can help your business achieve its aims, get in touch with our expert team for a no-obligation discussion.