Debt factoring is an invoice finance facility when a business raises an invoice for work completed, passes this to the debt factoring provider who then follows up the payment from the debtor on behalf of their client.
Debt factoring is a form of business funding and uses one of the most significant assets your business has - your accounts receivable. Your debt factoring provider then collects the full invoice payment from your customer and pays you the outstanding amount, minus a small fee.
The debt factoring company will chase the debtors for payment of the invoices and once received, will give the remaining 10% to the business, minus their fees for providing this service.
The business will be given up to 90% of the invoice value almost immediately from the point of raising the invoice, therefore reducing the cash deficit for the small business.
Debt factoring is proven to help businesses grow and prosper and is an excellent alternative to a bank overdraft.
The cost of debt factoring is split in to three key areas:
All reputable finance providers will be transparent about the fees and costs related to the facility prior to signing the agreement.
Debt Factoring can be both a long and short term form of borrowing. The majority of businesses incorporate Debt Factoring in to their general business operations, with associated costs factored into overall profit margins, tending to view the facility as more of a long term solution.
There are a variety of reasons companies utilise Debt Factoring services for their business. For starters, Debt Factoring helps companies reduce their cash flow concerns by receiving payment of invoices straight away. Customers who take a while to process your invoice payment can put a strain on your cash flow, and Debt Factoring with Hitachi Capital Invoice Finance gives businesses an option to receive cash in 24 hours, as opposed to waiting 30, 90 or even 120 days to get paid.
Hitachi made the process of moving factoring facilities painless, bearing in mind we previously had our facility with the same provider since 1997. I cant fault Hitachi's staff and processes and we are delighted with the move.
10:45, October 21, 2021
Staff excellent all together professional
05:57, October 03, 2021
Great service so far
14:20, August 27, 2021
Game-changer for our transport business
16:29, August 07, 2021
Excellent customer support
11:53, August 06, 2021