Factoring on the increase to help SMEs

12/09/2008

According to Leonard Curtis, the UK's national rescue and recovery firm for businesses, the use of factoring has increased over the past months in order for small to medium sized companies to continue trading.

One of the many reasons for this increase in commercial finance is that many banks seemed to have closed their doors to the idea of new loans for first time or small businesses because of rising debt and a rise in the number of businesses failing due to the credit crunch.

Factoring is common in the world of small business and is used as a means of providing a steady stream of income which can be used to ensure the paying of salaries and monthly bills and as such has become an intricate part of many businesses' accounting processes.

It is widely accepted that many small businesses would fail if it were not for the ability to sell their accounts receivable invoices to a third party in exchange for cash advances to help keep them afloat.

And as the credit crunch is set to hold the United Kingdom in its grasp for some time to come the factoring industry can expect further rises in the number of companies using its services.