Reviewed: 1st February 2016
With such a broad choice of lenders in the invoice finance market, it’s difficult to know which would be most suited to the type of business you run, and the industry in which you operate.
Specialist factoring companies exist, offering sector-specific knowledge and expertise, with others putting together tailor-made agreements for a wide range of businesses. If you haven’t thought about using an invoice finance broker, they are invaluable in cutting through industry jargon, and uncovering the all-important small print before you sign a contract.
In short, a good broker or agent will help you find the best solution in a potentially complex choice.
So what are the main characteristics of invoice factoring and discounting? Firstly, let’s have a look at invoice factoring.
Brokers for invoice factoring and discounting will listen to your business needs, gain an understanding of operational requirements and long-term objectives, and find the most appropriate lender.
Some brokers are completely independent; others are tied to certain companies and don’t offer the broadest choice. Generally paid by way of commission when an agreement is completed, a broker should offer advice and guidance as to why they have selected specific lenders.
When you receive a few invoice finance quotations, you might think they are all fairly similar in their terms and conditions. Once you look a little closer, however, it becomes clear that many details can differ between lenders. The types of charges made, and the notice period for exiting the arrangement are just two areas that need to be examined closely.
An invoice finance agent will be able to clarify this potentially complex set of figures, at the same time advising you on which company is most suitable.
Searching for factoring companies online can be an onerous process. You have to examine what each company is offering, establish a short-list, and then make a detailed comparison. It’s a lot of effort when you can simply input your details, and receive the results back in a matter of minutes using an online factoring agent.
A broker will understand the terms and conditions of various agreements, know what to avoid, and what might be essential for your industry. Factoring is generally a long-term arrangement, so you need to be certain that you understand the figures provided.
Reputable brokers are usually paid by way of commission from the lender when an agreement is signed, so the service could carry no cost to you. It’s a great way to receive free advice, and gain a deeper understanding of how invoice factoring or discounting will affect your business on a day-to-day level.
If you use an online broker, the results could be returned to you in a matter of minutes. You would simply input a few details about your business, such as levels of turnover and profit, how many invoices you send out each month on average, and the average number of debtor days. You would then be matched with a number of different providers whose lending criteria you meet.
Brokers and invoice finance agents often have access to discounts and deals that would not otherwise be available. Their contacts within the industry mean that you may get a better overall deal, with less stress and cost in terms of time.
Getting impartial advice is very important when taking out any form of borrowing. With the right broker your business will benefit from cash advances that allow your business to grow and develop naturally.
Real Business Rescue can offer independent guidance on debt factoring and invoice discounting. We have offices throughout the country, so give one of our team a call to arrange a free initial consultation.
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