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There is a growing trend in the business use invoice finance. These services help to improve cash flow by releasing funds from outstanding invoices, and it also reduces the daily admin on chasing payments and deal with bad debts, because the factoring company usually handles sales ledger a transaction. It sounds great, but not all companies are eligible to use factoring services.
Just as with the banks, the factoring company their own needs for their clients. They could be an independent company or owned by High Street banks, or maybe even brokers who want to go on business to choose partners. Whether they offer their own particular services at their own prices.
companies are generally eligible to use the elements if they fulfill some specific conditions. The most important thing is that they trade company to company. Many factors will not take on companies that sell to the public. A minimum turnover is also necessary, typically £ 50,000. This is because the loan has to be worth while that element. Some factors will lend money to small businesses, but they must have a certain number of customers. Both the company and its customers to have a good credit rating so that the risk of lending to them is low.
If you have small bills or a small number of customers, or if you have a lot of disputed payments and bad debt, you may not be eligible for factors. The best thing to do is to talk to factoring broker to find the best company for your needs.
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