How it all starts.
Business owners in their first years of growth experience cash flow shortages. Young businesses often have many debtors past 14-30 days. This experience looks good in accounting systems. However its not in your bank.
Not having the ability to purchase more stock or put on more staff halts growth. Often owners purchase credit cards or even get secured overdrafts with their banks. This does fix a short term issue.
Factoring has Flexibility
Before we obtaining a facility you need outstanding debtors and invoices. Having more outstanding debtors gives you greater security with factoring. Generally you provide an invoice or batch of completed invoices to the financeir. After the lender has verify that the invoices are complete. Also been placed into the payment process. The financier will offer up to 80% of those invoices into your account. The final 20% of the invoices will be released to you once your debtors pay for them. Importantly as your business grows so does you facility. With this in mind most banking products become more expensive as they grow. In most cases factoring lenders fees reduce to remain competitive.