Factoring and Invoice Discounting – Which is right for you? (Visual Guide)

M WINNER M WINNER FACTORING Business Moneyfacts Awards 2011 Moneyfacts ORGUK Awards 2012 Powered by Touch Financial Asset based Finance Broker of the year Factoring and Invoice Discounting What's the Difference? Unpaid invoices can be problematic to businesses of all sizes. They create challenging cashflow problems. However, there are several cashflow funding solutions available to help ease the strain. Two of the most effective options available are factoring and invoice discounting, but what are the differences between the two? Factoring - The Facts HY Factoring Agreement You Confidentiality? %3D What does it involve? As factoring involves a third party who effectively takes control of the debt, your customers will deal with Factoring allows businesses to approach an invoice financing them directly to settle payment, therefore making it likely that they become aware of the factoring company to handle their unpaid invoices for them. The factoring arrangement. 80-90% company provides cash advance similar to a Confidential factoring arrangements can also be arranged in certain circumstances. invoice discounting (an agreed percentage of the invoice value, that is 80-90% of the typically doand total amount) and manages the sales ledger, chasing up PAID PAID customers on behalf of the business to settle all invoice payments. Invoice Discounting - The Facts 80-90% Paid What does it involve? with 24hrs Most businesses generate invoices for their customers to be paid on credit, so 30, 60 or even 90 days after the invoice is created. Invoice discounting means a lender will view the invoice and give the business up to 80-90% of the invoice value, usually within 24 hours of its creation. Once your customer settles the full value of their invoice, the invoice discounter makes available the remaining balance (10-20%) less any charges. Invoice Value 10-20% Remaining Confidentiality? Who takes control? As you are responsible for chasing payment from your clients, your You. With invoice customers needn't know that a discounting, your third party is involved, meaning business takes control Lender everything stays confidential to your business. of managing the sales ledger; and you will chase payment on behalf of your business as normal. You Your Customer What are the benefits? Funding can be secured without requiring other collateral Long Term Cashflow Injection Immediate You stay in charge of your sales ledgers Cash Advance Factoring V's Invoice Discounting CONFDENTAL Collection is Your valuable time & outsourced, allowing you to maintain strong relationships with your customers resources are freed up from having to chase unpaid invoices yourself Allows funding for Growth Confidential Which is right for you? Largely depends, but a few things to keep in mind... Medium / Small Large Business Business In house Accounts Team OR prefer to keep sales ledgers confidential In-House No or limited No time to chase Accounts invoices OR need to free cashflow to grow business In-House Team Accounts Team Invoice Discounting Factoring Invoice Factoring Discounting Call 0845 017 7524 to speak to a consultant today. FACTORING ORGUK Powered by Touch Financial How Factoring.org.uk Can Help Introduce you to the most suitable lender Once we understand your business and how it operates we will short list and recommend two or three lenders best suited to your requirements. Provide ongoing support Our team of experts will keep in regular contact to ensure everything involved in the process is running smoothly 10 We won't charge you a penny Our expert advice is completely free and there are no hidden fees. Similar to a mortgage broker, we receive commission upon successful introductions. We're partnered with over 20 of the UK's leading lenders who offer the best rates. these lenders include 焱 RBS НTACHI Inspire the Nat ABN AMRO ultimate Finance BIBBY S Lloyds TSB The yalen ef Scetiand Commercial Finance Commercial Finance group ple M WINNER M WINNER FACTORING Business Moneyfacts Awards 2011 Moneyfacts ORGUK Awards 2012 Powered by Touch Financial Asset based Finance Broker of the year Factoring and Invoice Discounting What's the Difference? Unpaid invoices can be problematic to businesses of all sizes. They create challenging cashflow problems. However, there are several cashflow funding solutions available to help ease the strain. Two of the most effective options available are factoring and invoice discounting, but what are the differences between the two? Factoring - The Facts HY Factoring Agreement You Confidentiality? %3D What does it involve? As factoring involves a third party who effectively takes control of the debt, your customers will deal with Factoring allows businesses to approach an invoice financing them directly to settle payment, therefore making it likely that they become aware of the factoring company to handle their unpaid invoices for them. The factoring arrangement. 80-90% company provides cash advance similar to a Confidential factoring arrangements can also be arranged in certain circumstances. invoice discounting (an agreed percentage of the invoice value, that is 80-90% of the typically doand total amount) and manages the sales ledger, chasing up PAID PAID customers on behalf of the business to settle all invoice payments. Invoice Discounting - The Facts 80-90% Paid What does it involve? with 24hrs Most businesses generate invoices for their customers to be paid on credit, so 30, 60 or even 90 days after the invoice is created. Invoice discounting means a lender will view the invoice and give the business up to 80-90% of the invoice value, usually within 24 hours of its creation. Once your customer settles the full value of their invoice, the invoice discounter makes available the remaining balance (10-20%) less any charges. Invoice Value 10-20% Remaining Confidentiality? Who takes control? As you are responsible for chasing payment from your clients, your You. With invoice customers needn't know that a discounting, your third party is involved, meaning business takes control Lender everything stays confidential to your business. of managing the sales ledger; and you will chase payment on behalf of your business as normal. You Your Customer What are the benefits? Funding can be secured without requiring other collateral Long Term Cashflow Injection Immediate You stay in charge of your sales ledgers Cash Advance Factoring V's Invoice Discounting CONFDENTAL Collection is Your valuable time & outsourced, allowing you to maintain strong relationships with your customers resources are freed up from having to chase unpaid invoices yourself Allows funding for Growth Confidential Which is right for you? Largely depends, but a few things to keep in mind... Medium / Small Large Business Business In house Accounts Team OR prefer to keep sales ledgers confidential In-House No or limited No time to chase Accounts invoices OR need to free cashflow to grow business In-House Team Accounts Team Invoice Discounting Factoring Invoice Factoring Discounting Call 0845 017 7524 to speak to a consultant today. FACTORING ORGUK Powered by Touch Financial How Factoring.org.uk Can Help Introduce you to the most suitable lender Once we understand your business and how it operates we will short list and recommend two or three lenders best suited to your requirements. Provide ongoing support Our team of experts will keep in regular contact to ensure everything involved in the process is running smoothly 10 We won't charge you a penny Our expert advice is completely free and there are no hidden fees. Similar to a mortgage broker, we receive commission upon successful introductions. We're partnered with over 20 of the UK's leading lenders who offer the best rates. these lenders include 焱 RBS НTACHI Inspire the Nat ABN AMRO ultimate Finance BIBBY S Lloyds TSB The yalen ef Scetiand Commercial Finance Commercial Finance group ple