What Factoring Is
Turning eligible unpaid invoices into a more responsive source of business cashflow.
Factoring can provide ongoing funding against eligible invoices rather than requiring the business to wait for customers to pay under their normal credit terms.
Under a factoring structure, the provider will normally also undertake agreed collections and sales ledger functions. That can make factoring particularly relevant where the business wants both funding and support managing debtor collections.
Structure Will Depend On
The London Cashflow Dimension
In a high cost trading environment, slow payment can become expensive very quickly.
A London business may need to meet payroll, premises costs, suppliers and other operating commitments well before customers settle their invoices. When payment terms stretch, otherwise successful trading can absorb increasing amounts of cash.
This can be particularly relevant for businesses where people, suppliers or project delivery costs are incurred before customer receipts arrive. Growth can intensify the pressure because more work can mean more cash committed before more cash is received.
The London question is therefore not simply how quickly invoices can be funded. It is whether the cash conversion cycle is supporting the business or restricting what it can do next.
Why Businesses Consider Factoring
The problem is often the gap between doing the work and getting paid.
Factoring Or Invoice Discounting?
Funding against invoices does not have to mean the same service structure.
Factoring can combine funding with collections support. Invoice discounting may allow an eligible business to retain greater control of its own collections and customer relationships.
The right choice depends on the business, debtor book, internal systems, customer relationships and the level of control or support required.
What We Will Consider
The Commercial Distinction
More sales do not automatically mean more available cash.
A growing business can report stronger turnover while simultaneously experiencing greater cashflow pressure. If the cost of delivering additional work is paid before customers settle the resulting invoices, growth itself can increase the funding requirement.
The funding conversation should therefore begin with the cash conversion cycle and the intended business outcome, not simply with the assumption that factoring is the answer.
Our Role
Start with the cashflow problem before selecting the facility.
The Aftersales Network Limited is a credit broker and not a lender. We assess the trading profile, debtor book, customer payment cycle, funding requirement and service needs before considering the most appropriate route.
Where factoring is appropriate, we consider more than the headline funding cost. Advance structure, service, collections, concentration, flexibility and lender fit can all influence whether the facility works effectively for the business.
Strategic Funding Assessment
Start with what is causing the cashflow pressure.
Tell us about the business, turnover, debtor book, customer payment terms and what needs to change. We will assess whether factoring, invoice discounting or another funding structure should be considered before the enquiry reaches the market.
Related Funding Routes
Cashflow pressure can have more than one funding answer.
London Cashflow
Doing the work now but waiting too long to be paid?
Complete our Strategic Funding Assessment and tell us what is creating pressure on cashflow. We will assess whether factoring, invoice discounting or another funding route is the most appropriate way forward.
Start Your Funding Assessment Discuss Your Requirement Call 0845 299 6668