Advantages of Using

Advantages of Using�

Improved and more predictable cash flow– By using invoice factoring, you can have the bulk of your invoices paid almost immediately rather than having to wait for the money to come in (potentially after extensive chasing on your behalf). It makes business planning and forecasting more accurate and allows you to take advantage of opportunities that might otherwise be unaffordable.

Better chance of your business surviving– Better cash flow gives your business a better chance of survival. Many businesses fail due to poor cash flow, and invoice factoring can keep yours healthy – as long as you use it wisely..

Cheaper and easier than a bank loan– Invoice factoring is usually cheaper than a bank loan and easier to obtain, making it good for short-term funding needs. It also takes the hassle of debt management out of your hands. Depending on the size of your customer base, that could be a big saving.
Reduces your business overheads– Invoice factoring services could reduce your business overheads. While there are fees associated with invoice factoring, they may be less than the cost of paying dedicated credit control staff. Invoice factoring may also improve the morale of people working in your accounts department, as chasing payments is often stressful work.

Factoring vs Bank Loan: A Detailed Comparison

Factoring	Bank Loan
The amount of money you can finance grows as your receivables grow.	The money you borrow comes with a cap or a limit.
Factoring is not a loan. You assume no debt.	You repay principal and interest on your loan.
You can qualify for factoring regardless of your credit score.	Qualifying for a loan requires a review of your company’s financials, assets and liabilities, and credit history.
It can take less than five days to set up an account.	Securing a loan or line of credit takes between one and two months.
Funding can take place within 24 hours.	Once your loan is approved, you have immediate access to those funds.
Minimal paperwork and documentation are required to start factoring.	Extensive paperwork, financial statements and personal information are required.
Some factors handle collections of your accounts receivable and provide additional back-office services.	No accounts receivable or back office services are provided.
Rates can be adjusted as you finance more money through factoring.	Your annual percentage rate is locked long-term, or for the life of the loan.
Some factors provide credit reports and other information on your existing and potential customers.	No credit services provided, which means you manage your own credit policy.