There is a famous saying in business that “cash is king”. Even a business that is profitable can fail if it has a poor or uneven cash flow.
Debtor factoring provides a great facility for business-to-business service providers and wholesalers by enabling them to improve their cash flow and avoid having to wait for their customers to pay.
How debtor factoring works
As an example, if a wholesaler delivers $20,000 worth of goods to a retailer, they give the retailer an invoice that is payable in 30 – 90 days. The wholesaler would have rent, staff wages etc to pay in the interim, so they may have cashflow issues. To smooth out their cashflow, once they deliver the goods to the retailer we can organise for the wholesaler to receive up to $16,000 (up to 80% of the invoice total). Once the retailer pays the invoice in full, the wholesaler will be able to keep the balance $4,000 (20% of the total invoice) less a small fee and applicable interest for the time it took to have the invoice paid.
The fees that you incur with Debtor Factoring / Invoice Discounting can be passed on to clients who do not want to pay COD.
Debtor Factoring provides an ideal funding facility for businesses that want to grow.
The team at Intelligent Finance has specialist expertise in this area. Contact us today to find out how we can arrange debtor factoring finance to match your requirements.