Your Guide to Debt Factoring

If you’re seriously considering an invoice factoring agreement then there are plenty of providers here in the UK. The market has grown massively in the last few years, which means competition is greater than ever before. Just a few years ago there were ten or so invoice factoring companies out there. Now there are 40+. The good news for you is that the competition has brought the costs of factoring down and the service levels up. There is also a new breed of industry-specific factors that provide specific benefits to companies that operate in the industries they serve.

Invoice factoring specialist or generalist?

While some factors serve a broad range of industries, businesses that face unique challenges can benefit from an industry-specific factoring partner. Whatever industry you operate in, you need to check that the factoring provider you are considering works with other companies in your industry and has an in-depth understanding of your business model and the unique challenges you face. A factor that understands how your business works should add more value to your operation by offering industry-specific benefits and creating a bespoke package that meets your needs.       

What industries might benefit from an invoice factoring specialist?

  • Construction

The hierarchy of contractors and subcontractors can mean long delays in payment for those further down the payment chain. These longer payment terms and a higher risk of customer insolvencies than most industries can mean construction firms benefit from factors with specific knowledge of the sector.

  • Recruitment

The disparity in the time between paying staff and getting paid for the services provided has always been a hurdle for recruitment companies to overcome. This can make it difficult to have any sort of control over cash flow, making planning for future all the more of a challenge. Specialist recruitment factors will be able to tailor a package specifically for your business based on your payment terms.

  • Logistics

Logistics companies have a greater demand for cash than many other businesses, with the fluctuating costs of fuel, drivers and maintenance all to pay for. This can mean companies struggle to find the cash they need to fulfil their deliveries or make reliable financial projections. A logistics factor that knows the industry inside out can put smaller companies ahead in the market by freeing up the money they need to offer faster response times and greater flexibility.  

  • Wholesale and distribution

Long credit terms are the norm in the wholesale industry and this can make cash flow issues a reoccurring problem. Wholesale companies tend to deal with larger companies which use their size to negotiate payments terms of up to 120 days. There are also issues involved with the import and export of goods. A specialist wholesale factor will understand all of these issues and be able to put together a deal that meets your particular needs.  

Get a quote

You can read more about invoice factoring here. Alternatively, if you’re ready to see what kind of factoring deals are out there right now, you can compare the UK’s leading invoice finance providers or call 08000 24 24 51 to find out more.