Accountants say business owners seeking factoring options

15/10/2009

Factoring invoices is an effective way to boost working capital during times of recession, says the Financial Times.

A recent article said that cash is still very much king during a recession, although more and more companies find themselves without ready cash as invoices are not paid on time.

In addition, the current short supply of credit to businesses is unprecedented and leads to an even bigger problem for business leaders, who are finding getting their debtors to pay up is like getting blood from a stone.

Research from 1,000 accountants has found that the number of businesses refused credit has tripled. The accountants also said that there was a 60 per cent increase in the number of business owners seeking advice about other types of funding.

Invoice factoring is one such funding option. Factoring is recommended for firms with a turnover of over £100,000 and invoice discounting is best for those with turnovers greater than £500,000.

Both options offer immediate access to cash that is being held up in the system, allowing companies to expand and invest despite the recession.