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Factoring Companies – what do they do?

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Factors or debt factoring companies, as they are also sometimes known, provide financial services to businesses based on the values of the invoices that it issues for its normal goods or services.  In essence, factors are third party handlers for these invoices; they advance funds to the business based on the invoice value and then pursue payment with the customer on their own behalf, when the invoice falls due.

Factoring companies provide a range of services, including the collection of the debts and the management of business ledgers, although the individual company can retain control over how the sales ledger is managed.  Factors also supply credit insurance and other useful business support services.

Choosing a Factor

There are independent factors, as well as financial institutions and banks that offer factoring services.  Investigate several possibilities before making a decision, as services and costs will vary from one company to another.  Always check out a company’s reputation and take up any references supplied.  Using a broker is another option, this may save money as the broker receives a commission and therefore makes no charge.

The post Factoring Companies – what do they do? appeared first on National Society.


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