Cash Flow – factoring provides up-front cash flow and expands working capital. The amount of working capital provided also grows with the amount of sales turnover.
Credit Control - the financing company takes care of some credit control functions such as check collections and reporting, thereby freeing up management to focus on the business.
Financing – factoring is “affordable when compared with other other sources of business finance” according to the article.
Qualification – the qualification criteria is focused on the credit-worthiness of your customers rather than the credit-worthiness of the busienss.
Restrictions – proceeds are not subject to spending restrictions.
The article advises that these advantages vary between invoice factoring firms and encourages businesses to shop around and compare the offers, terms and conditions before accepting an offer. Businesses are also encouraged to think about contingency measures such as credit insurance as you are required to refund the invoice factoring firm when debtors fail to pay.
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