Factoring can be a cost-effective cashflow solution for all kinds of businesses. But what sort of businesses qualify?
Generally, there are four basic requirements:
1. Business to business. Your business must be trading with other businesses. Factors would be wary of lending against invoices issued to individuals.
2. Credit sales. You must be trading with your customers on credit terms. Your business must invoice for products or services supplied with payment being due within say, 30, 60 or 90 days.
3. Balanced sales ledger. You should have an even spread of customers, with no single customer invoice worth more than a third of the total value of your sales ledger.
4. Verifiable invoices. Your business must be issuing invoices for services provided or products delivered. There should be documentary evidence to support the supply of these goods or services.
Individual lenders have differing criteria, but if you can fulfil the four requirements above, you would qualify for any form of factoring. Our expert consultants work with a panel of over 20 of theUK’s leading lenders to find the most suitable deals to meet the requirements of your business.