FAQ (Frequently Asked Questions)
What does it cost?
Service charge of 0.6% to 3.0% of sales factored and
an interest charge for the cash advances calculated
comparable to normal secured bank overdraft rates.
When do I receive the cash advances from
the factor?
Typically within 24 hours. You will need to check with
any factoring company about this, because every company
can differ in their practises, so always ask the questions
before signing anything.
How much of the invoice amount is advanced?
Typically 80 to 90% of the invoice amount. In some cases,
this may be more, and may be less, so always check out
the terms and conditions first, and ask the factoring
company directly.
What is the difference between factoring
and invoice discounting?
Both provide immediate cash with the issuance of invoices.
Factoring includes a full sales ledger service management
and debt collection service that is disclosed to the
customer. In invoice discounting the sales ledger management
- the collection responsibility - remains with you.
The service is undisclosed to the customer.
What is the difference between recourse
and non-recourse financing?
Recourse factoring excludes bad debt protection. In
the case of non-recourse factoring, if the customer
fails to pay the invoice, the factor will pay you.
What is invoice finance?
Another phrase for factoring and invoice discounting.
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Invoice
Factoring Guide
