Factoring Insights

What is a Factoring Company?

Why choose a factoring company over other lenders?

A factoring company is a specialised financial services organisation that provides businesses with working capital by purchasing their accounts receivable and taking care of the invoice payment collections on their behalf.

Most factoring companies pay around three-quarters of the invoice amount in cash up-front and then settle the balance, minus an administration fee, once the account has been paid by the client.

This method of business funding is called factoring and is a well-established financing mechanism used extensively across the globe, including the business communities of Europe, the UK, the US and South Africa.

How does a factoring company work?

The factoring approach is designed to help SMEs and other organisations improve their cash flows, enabling them to cover operational expenses despite granting extended credit terms to customers.

Often, these businesses run low on working capital because their customers make full use of the credit terms extended to them to settle their accounts.

Essentially, factoring is a method of funding businesses to maintain a positive cash flow for companies to stay afloat and even continue growing, without having to give up equity or control, or apply for a conventional bank loan (which can be a slow and frustrating process).

How to choose the right factoring finance provider

If a business owner is in a cash flow crunch or needs working capital now rather than later, it often makes sense to ask a specialised factoring company to meet the organisation’s invoice factoring needs rather than approaching another type of lender, like a bank.

While there are numerous institutions offering factoring as a service, an independent factoring company like Merchant Factors can provide clients with a factoring solution that is personal, flexible and scalable.

This is because banks and other financiers offer a wide range of services in addition to factoring. Their large corporate structures and diverse product portfolios may hamper their ability to provide the same focused and hands-on service that are on offer at Merchant Factors.

Benefit from faster access to finance

Merchant Factors is a factoring company founded in 1988 with the purpose of offering growing businesses an alternative to traditional bank loans and overdrafts. This has always been their focus; and today, they are leaders in the factoring industry.

Their decades of experience, coupled with their independence, mean that they are ideally positioned to offer clients the fastest turnaround time in the industry from application to pay-out.

As a result, clients can access the cash they need as and when it becomes “business critical”, rather than waiting too long and putting their companies – and employees – at risk.

Opt for flexibility

Merchant Factors, offer a flexible service, not a pre-packaged solution. Thanks to their culture of innovative and entrepreneurial thinking, they tailor the facilities to suit the needs of their emerging small and medium size businesses.

They also have a flat organisational structure, which means that decision-makers have full visibility of each business, as well as its unique requirements and challenges. This enables Merchant Factors to offer a service that is relevant to the specific industry and one that takes the client’s business goals into account.

The added advantage of back-office support

Unlike most banks, Merchant Factors provide a comprehensive suite of debtor administration services. Outsourcing debt collections to them adds further value to a business, both in terms of the time and effort that the organisation will save, as well as having access to years of experience in this field.

These debtor administration services cover: opening of new debtors accounts; performing the necessary credit and credit limit checks; sending reminder letters and final demands where required; verifying deliveries as an after-sales service; helping to settle disputed accounts and liaising with attorneys, if and when accounts are handed over.

All these services are conducted transparently and in consultation with clients, to ensure full communication and provide comfort with the processes undertaken.

Does your company require working capital, now?

If you are looking for a smart way to free up cash within your business, then you should consider partnering with the factoring company that has helped over 2,000 companies meet their financial and business goals.

For fast, flexible financing – contact Merchant Factors today.