Most factoring companies provide a 90 day factoring service however with some providers it is possible to get close to 120 days without any additional charges.
With most finance companies the clock starts ticking on the day you submit the invoice, however with one or two providers the clock starts kicking at the end of the month.
Therefore if you submit an invoice say on the second of the month the 90 days don’t start until the end of that month.
For many businesses this additional working capital as customers seem to be taking longer and longer to pay. If you are factoring with a company that starts the 90 days the day you submit your invoice you potentially will pay more charges and have a reduced funding line. As soon as you hit 90 days and if your customer hasn’t paid then the value of that invoice will be deducted from your available allowance restricting available cash. In addition if there isn’t enough of an available allowance you will go over your agreed prepayment possibly triggering expensive charges for over payments.
Indeed it has been recently suggested that certain finance companies hold back cheques and don’t pay them to their clients account until a day or so after invoices become disallowed after 90 days therefore triggering charges.
Surely not. The fact of the matter is that customers should be paying within the 90 days and a good factoring company should be collecting debt in the necessary time scale. Unfortunately this doesn’t always happen and as such a few extra days funding can make a big difference.
A good factoring broker will be able to add value and select the most appropriate finance company for your particular requirements.
Tags: Factoring, factoring broker
