Factoring, does it help with collections
What Debtor Finance is all about.
Factoring, does it help with collections is a common question. Debtor Finance, Factoring, Invoice Discounting are not all the same product. So how can the collections on these facilities be the same.
The simple answer is “yes”, Factoring does effect your collections. As a result having a as a third party can make debtors pay more regularly. This is most effective if you as the client have explained the process to them. Most Noteworthy is the longer your invoices take to be paid, the more its costing you.
Unlock the way to keeping fees down when Invoice Financing
With nearly 45 factoring lenders in the industry, each has a different collection strategy. This will depend on your size, your exposure, and of course the type of facility you have. If you have a facility where there is a daily interest added to your fee, then it would be reasonable to assume, the level of collection would be lower than a firm with a set fee.
Will Banks Help you with collections.
Bank products often do no collections as they are a confidential product, allowing the client to maintain all those procedures as the bank has access to the trading account to monitor. Smaller lenders don’t have that luxury and whether its disclosed or not, the client has to maintain constant checks to ensure that their accounts are up to date and their not incurring added interest or late fees.
Disclosed lenders, often put out statements, and will verify a percentage of the invoices, this acts as deterrent in most cases for the slack paying clients. Also seeing a financial firm on the bottom of the invoice, often makes clients avoid any nasty stuff come pay day.
However, conflict will often start if the debtor goes beyond terms, and its a large piece of your ledger. Factoring firms, will put other invoices on hold. As a result assist in heavy collection calls to avoid there being a bad debt. So please stay on top of your accounts when factoring.
For more information in regards to the different facilities, please call our office on
07 5547 8731 or email: email@example.com
Trade Debtor Finance supports up to 28 lenders in Australia and each facility is different. At no direct cost to your firm, we offer our recommendations in writing. Therefore TDFC support your firm for the life of the loan.