What Are The Benefits Of Factoring?

Factoring is the process by which debts - in the form of outstanding sales invoices - are assigned by a supplier of goods or services to a third party debt factoring company.  The factoring company will collect the debts and pay the supplier a proportion of the debt in advance of that collection.  Some factoring companies will advance as much as 90% of the value of the supplier's invoices within 24 hours of raising them.  

Factoring can greatly improve cash flow for the supplier and helps avoid the problems caused by slow-paying customers.  It is especially useful to fund growing companies who need immediate capital to expand their businesses.   Factoring is a good alternative to a loan as it does not involve taking on any debt, and the associated interest payments, but is instead a means of generating cash directly from the assets of your company.  From an administrative point of view, it's also a way of getting someone else - the factoring company - to deal with the hassles sometimes attendant in getting paid.