Appeal of factoring widens

19/09/2008

Factoring has traditionally been seen as a solution for the manufacturing industry, to cover their large production costs while they wait for invoices to be paid. However, with the credit crunch squeezing the margins of most businesses, companies in other sectors are exploring the benefits factoring can offer them.

As banks close their doors to business lending and customers (with credit issues of their own) take longer to settle their bills, it's understandable that businesses of all kinds are showing an interest in factoring and invoice discounting services.

A significant advantage of factoring is that, unlike banks which limit the amount of cash loaned upfront or via a line of credit, the amount of money available through a factoring or invoice discounting solution is limited only by the value of the receivables.

Factoring doesn't require security or personal guarantees, and finance can be generated very quickly.

Factoring is no longer the domain of the manufacturing industry. Any business wanting to finance growth, improve cashflow or stabilise operations could consider a factoring or invoice discounting service.