Debt factoring is when a business needs immediate cashflow and so will sell its invoices to a broker who can arrange for an advanced payment to be made. Often clients will take 60-, 90- or 120-day payment terms and waiting for that payment is not always a viable option for the company. This is where debt factoring (also known as invoice finance, invoice factoring or invoice discounting) can be utilised.
In essence debt factoring involves 3 companies: a business, its clients and a debt factoring company:
- The business can be any type of company selling products or services and they are happy to provide their clients with extended payment terms
- The client is the company that has purchased the products or services and are committed to pay for these sometime in the future
- The debt factoring company (NGI Finance) are the company that purchases the invoice from the business, provides advance payment and then collects the full invoice value from the client when the payment is due
The key benefit of debt factoring is the ability to provide businesses with quick access to cash, allowing them to boost cash flow, maintain a profitable business and continue with fulfilling ongoing growth plans. Having the ability to work with a debt factoring specialist as opposed to the traditional route of approaching your bank is a far simpler and quicker process.
To find out more about debt factoring feel free to call us on 01993 706403 or e-mail email@example.com.