Cashflow Finder - helping your business cashflow!

Factoring Cashflow Finance

What is Factoring Cashflow Finance?

Factoring is the most common form of cashflow finance and is used by many businesses in Australia. In its simplest form, a business sells its debts to the financier, who then pays the business 70% - 90% of the value of the invoices (and the balance when the customer pays the financier), which provides immediate cashflow to the business. The financier does the waiting for 30 - 90 days for the customers to pay. Factoring facilities usually also provide sales ledger management, customer credit checking, collections and related services.

How does Factoring Cashflow Finance work?

The business provides copies of its sales invoices for the goods and services it has sold and delivered to its customers. The financier assesses the customers and buys the acceptable invoices, paying funds immediately to the business. The financier will usually liaise with the customers to ensure payment, which will go direct to the financier. The factoring fees will vary depending mainly on how long it takes customers to pay. The collections work might also be carried out by the financier and using its computerised accounting systems, the financier might also provide sales ledger management, which can be of particular value to smaller businesses.