This method of providing working capital and accelerating cash flow, is geared to help businesses to grow profitably from a sound base. It combines flexible finance, linked to turnover, with a professional debtor administration and credit control. Compared with a bank overdraft facility, factoring is a more flexible means of finance, effectively converting credit sales into cash sales. It does not involve borrowing, but simply releases cash already earned which is tied up in accounts receivable at that time. Factoring provides the cash that is essential for the running of your business and makes available experienced staff for the vital but often neglected areas of credit control, collection and debtors administration.

A contract is entered into between Merchant Factors and yourself, wherein you agree to factor your credit sales for a minimum period of 12 months.

As soon as goods are delivered or services rendered, you will raise an invoice. A copy of the invoice is held by your customer, while a second copy, together with the proof of delivery, is sent to Merchant Factors. Once the invoice has been processed, Merchant Factors provides up to 80% of its value to you, in cash. Your customer is instructed to settle the amount owing under the invoice to Merchant Factors. Upon settlement by your customer, you receive the remaining percentage of the invoice value, after Merchant Factors has recovered the amounts paid out earlier

Our professional credit controllers will administer your sales ledger on your behalf. They will asses the creditworthiness of your customers, attend to credit control and debtor administration, take care of the collections and institute legal action if needed, thereby making sure that you are always kept informed of all business transactions through clear, comprehensive sales and related management information.

Cash for expansion: As finance advanced by our factoring facility is directly related to your current sales performance, increased sales mean a corresponding automatic increase in the amount of money available to your company, keeping pace with its expanding requirements.

Increased sales: You will now be able to diversify into other product lines, or buy more of existing lines, to increase stock and allow you to fulfil orders which might otherwise be lost.

Increase margins and improve credit rating: Your bargaining power with suppliers will improve, allowing you to take advantage of bulk settlement discounts to reduce the cost of goods to your company, improve your gross margin and enhance your credit rating by paying promptly. This saving could also go a long way towards covering the cost of factoring.

Saved management time: Time spent by senior personnel in assisting with debtor collection is reduced. Management will be able to concentrate on running the business, rather than the less productive, although important, task of collecting debts.

Reduced overheads: You will make substantial and immediate savings in the cost of stationery, telephones, postage, office staff and equipment.

Minimizing potential bad debt: Merchant Factors' analysis of delinquent debtors will help you to prevent losses and bad debts, as well as facilitating the early identification of high risk debtors.

Improved return on capital: Companies will note an improved return on capital following from the ability to sustain higher levels of trading on your existing capital base.

Expansion without loss of equity/control: Maximizing the overall capital available to your business, without diluting ownership may be the most important benefit of all.

• Administration fee: Our fee is normally 0.5% to 2.5% of turnover, covering sales administration and credit protection. The actual figure will be based on various aspects of the service, such as the number of invoices to be processed, volume of sales and quality of customers.
• Discount fee: A discount (interest) fee is calculated on the amount advanced and is normally 1.0% to 2.0% above the ruling prime bank overdraft rate.

• be able to expand faster knowing that as sales increase, funds are always available.
• feel more confident about future growth and profitability if you could easily evaluate your customers' creditworthiness.
• be able to concentrate your efforts on what you do best if the administrative burden was removed from your responsibility.
• benefit by retaining undiluted ownership of your business as it grows.

Merchant Factors has the financial package specially suited to you. To arrange for a professional Business Development Officer to call on you at your place of business to discuss how factoring can help your business to grow, simply contact us at one of the branches listed on the back page.