Good quality debtors – they will look at the credit rating of your customers and if they are prompt payers.A good “spread” of debtors – they would rather see 20 or 30 customers in your ledger than heavy reliance on 2 or 3 (- however, please see “spot or single invoice factoring” below).In simple terms factors like and will therefore generally charge less where there is: Whilst they will look at your own company, they are even more interested in the customers you supply – their track record, credit history and the industry in which they operate. Like any lender or funder, factoring companies will measure risk against reward – the greater the perceived risk the higher the reward they will seek – a greater cost to you.įactoring companies tend to look at several key factors when it comes to providing a facility. This can make a comparison between companies and terms very difficult.
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There may be other charges and the terminology can vary from company to company. Most factoring companies make extra charges such as arrangement fees (to set up the facility), exit or termination fees, survey fees, audit fees and penalty fees.
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But what is invoice factoring and how does its pricing change? Essentially it depends on a number of different variable factors. It also helps businesses struggling with cash flow, or those who need a rapid injection of cash. Invoice factoring is a great product for growing businesses, providing the extra cash needed to fund expansion.