This type of finance provides cash flow secured against the value of outstanding invoices. It takes two main forms
Firstly where the lender remains invisible and the business controls the credit collection process and, secondly, where the lender requires more control, the lender handles all credit collection and is therefore visible to the creditors.
The second option has the benefit of outsourcing the credit collection but some companies prefer their creditors not to know they have a factoring agreement in place. This type of facility can also give borrowers access to, or be used in conjunction with asset finance, stock finance and unsecured business loans.
The quality of creditors and size of the invoice book will determine the level of interest from lenders with a wide spectrum of choice from high street banks to specialist lenders.