Whether you’re a new business that depends on regular cash or an existing one that anticipates an increase in sales and wants to take advantage of the opportunity, you may want to consider a factoring firm. There are many benefits that come with factoring and invoice discounting Wellington and may very well be the answer to your cash flow issues.
If you’re familiar with factoring, chances are you’ve heard of invoice discounting Wellington as well. The two are pretty similar, but you need to have a proper understanding before deciding which one best suits your business requirements. In this read, we’re going to explain the two and mention several of their benefits.
In understanding this difference, it is best that there’s is someone whom you can rely on. On this kind of industry, Asset Factors is a well-known company offering assistance with their professional expertise.
Factoring is a financial institution that allows you to raise finance based on outstanding invoices. Rather than sending invoices and have to wait for several weeks to get the money, you can turn them into cash almost immediately. Factoring an invoice simply means that you are selling the rights of the invoice to the factoring facility. The sale is arranged and the factoring firm pays you the amount in two payments. The first is referred to as the advance and it’s issued as soon as you transfer the rights of the invoice and can be up to 90% of the invoice. The remaining is known as a rebate and it’s received when your client settles the invoice.
When you apply for a conventional bank loan, you need to wait for some time to get approved. However, factoring is way more viable as the waiting period is usually short and you can get the money in less than 24 hours. The biggest worry when it comes to factoring is that you need to have a good credit to be approved. However, as long as you work with a strong client list, you have a better chance of getting a factoring line.
This works just like factoring, by freeing up your money from invoices. However, in discounting, the lender doesn’t offer credit management services in order to facilitate the collection of outstanding invoices. The facility will just release the invoice value and leave you to handle the credit.
Cash is a vital aspect of running a business and if you’re owned and do not actually have it at hand, it can lead to frustration, headaches and even make you miss on sales opportunities. Invoice discounting Wellington allows you to keep control of the debtor book since you’re in charge of credit management. This means that you are responsible for collecting outstanding due payments.
The primary benefit of invoice discounting Wellington is that it doesn’t have an impact on your relationship with the clients. There’s no reason for the clients to know about the contract. This ascertains that you’re able to provide the same credit terms arranged with your customers without affecting your business’ cash flow.
As you can see, invoice factoring and discounting are similar, apart from when it comes to credit management. For proper cash flow and service terms, you should pick a reputable factoring company such as Asset Factors.