When is it Time to Consider Invoice Factoring?

If you’re running a small to medium sized business then you’ll undoubtedly be aware that one of the key challenges is maintaining a healthy cashflow. Having control of the money coming into your business and what goes out of it is essential to helping your business thrive and if your cashflow struggles, it can have several negative effects on your business including:-

  • Unable to settle invoices and owed monies: Poor cash flow management can result in you being unable to pay suppliers and even your staff.
  • Harm your credit rating: Frequently defaulting on short and long term financial obligations can in certain circumstances harm your company’s credit rating.
  • Diminish your competitive advantage: Poor cash flow can harm the competitiveness of your business because you are unable to finance the required investment needed to keep your competitive edge over rivals. This could be investment in new tech for example.
  • Most importantly, it can threaten the very existence of your business. If your business cannot pay suppliers and creditors, it won’t be very long before the company’s insolvency results in closure.

It is clear to see that poor cash flow can kill a business and it is time to consider invoice factoring if you are experiencing any of the following:-

  • Are you a startup business that is struggling to get finance from the existing traditional sources of finance such as banks?
  • Are you experienced an increase of slow paying customers or clients and is thus negatively affecting your monthly cash flow?
  • Does your business have a long sales cycle? Does a slight dip in sales or a delay have a serious impact on your cash flow?
  • Is your business sometimes struggling to find the money to invest in its growth, such as paying for new equipment and training?
  • More worryingly, are you sometimes struggling to find the money for your company’s payroll?

If you are experiencing any of these then it’s time to consider invoice finance. However, it is wise to proceed with caution. A Quick Google and you will find a whole host of factoring companies out there, all offering what they say are the very best deals on the market. However, all is not what it seems because what may be a good deal for one company may not be good for another. There may be other charges involved and what on the surface may seem like a great deal can turn out to be a very expensive mistake. In view of this, it is always advised to go through a factoring broker. Independent from the companies involved, a factoring broker can explain what deals are available, highlight any hidden charges and ensure you get the best deal for your business. And the best news? As well as independent advice, you may even get a better deal because often factoring brokers have access to better deals than are available to the public.

If you’re considering invoice factoring then why not give us a call today? As independent factoring brokers, we have helped improve the cashflow of many businesses across the UK. Call us on 01827 707680.

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