 8. Choosing non-recourse factoring will help you protect your company from bad debts.
9. As soon as orders are invoiced, cash will be received. In this way it can be used for capital investment and funding future orders.
10. It is possible to get really good deals as the market is very competitive.
Using factoring and invoice discounting services, they become established to suit your business. It means the actual fees you pay will vary relying on your specific needs.
There are two types of fee:
1. The first type is concerned with the interest you pay on the money you use which tends to range from 1.5% to 3 % over the base rate. Comparing it with other forms of finance, about the same cost or less than overdraft rates from a bank, you'll see it is very competitive.
2. The second type is a service fee which can also be referred to as a credit management fee. Besides, the size of this fee varies and will mostly rely on your turnover. The typical fees for factoring range from 0.75% to 2.5% of total turnover. Invoice discounting allows these fees to range from 0.2% to 0.5% of turnover, meaningly lower because only finance is provided.
As there is a wide variety of factoring services currently available in the market, it will be difficult for companies to find the most effective and lowest cost deals.
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