Factoring vs Overdraft Facility
Factoring is a suitable alternative to an overdraft facility. The ability of banks to lend on overdraft facilities has been reduced due to certain test cases in the law courts. Where historically they could take a debenture on your business to secure themselves against your book debts this is no longer as secure. As a result more businesses are taking up an invoice discounting or factoring facility. This offers several advantages:
- Factoring is a flexible form of finance that grows in line with your sales.
- Factoring offers a credit management service that frees up valuable time to grow your business.
- Factoring help collect debts in quickly which improves cash flow and reduces the risk of bad debts.
- Factoring can also include credit protection which can eliminate the risk of bad debts.
