Your debtors book can often lead to cash flow disruption that could negatively impact the operation of your business. However, there is a way in which you can use your debtors ledger to your advantage to receive a quick cash loan for your company to ensure that it stays in operation. The company is offering accounts receivable factoring Wellington.
What Is Accounts Receivable?
Accounts receivable is basically a line of credit or credit facility that a business provides to its customers or clients providing them with goods and services that they will pay for at a later date by the issuing of an invoice. Accounts receivable is classified as a current asset as long as the time frame for receipt of the debt is less than one fiscal year from the date of being issued. The amounts owing are normally listed according to an age analysis relevant to current accounts receivable, 30 days, 60 days and 90 days.
What Is Accounts Receivable Factoring Wellington?
Accounts receivable factoring Wellington allows for a percentage of your invoices to be provided to you on an ongoing basis upon receipt of your invoices by a financial provider like Asset Factors. Asset Factors will provide you with 80% of the total amount owed on your invoices within 48 hours of receipt of the invoices. The remaining 20% will be paid to you once the debtor has settled their debt in full. This type of finance acts in a similar fashion to a bank overdraft or credit facility except that your debtors will be making direct payment to Asset Factors.
In essence, this provides you with immediate payment for goods and services that have been delivered while Asset Factors holds the debt. One of the bonus benefits of accounts receivable factoring Wellington is that the financial provider will take care of the debt collection for your business. In other words, Asset Factors will chase down the money owed by your debtors to ensure that you and they are paid when the amount becomes due.
What Are The Costs Involved With Invoice Factoring?
In general, an administration fee will be charged in the form of between 1% and 5% of company turnover. Because this is a type of financing arrangement, interest will also be charged on the amount of the finance provided to the business. Interest will only be charged on the amount borrowed and is normally similar to that of a bank overdraft facility. You do not have to submit all your invoices for factoring, only the amount that your business needs to ensure constant and consistent cash flow.
There are multiple benefits to applying for invoice finance for your company. However, the greatest benefit is that your business will always have access to the money it needs to operate optimally without having to rely on payment from clients and customers. Disruptions to your cash flow can be costly and for some businesses, fatal. Asset Factors offers financial services to small and large business as well as new and established companies as a reliable alternative to a bank overdraft or business loan.