Factoring in the UK

FACTORING is an increasingly common way of improving cash flow and at KAFL we can find the right factor for your business.

The trade organisation, the Factors and Discounters Association, reported in September 2004 that combined turnover of its members rose by 14per cent in the year ending September 2004.

That meant that the combined turnover of its members was £96.5billion, with more than 39,000 businesses in the UK accessing services from the independent and the bank-affiliated sector.

Sometimes referred to as Full Service Factoring as well as just Factoring, the service is popular because it provides the complete answer to slow-paying customers, shortage of working capital and, if needed, protection against bad debt losses.

For exporting firms it is also attractive because many of the UK-based Factors have partners working overseas, making it much easier to chase money in unknown territories.

Should you be initiating or extending credit terms to your customers, your bank will consider this a risk where the Factor considers this as normal trading conditions.

Factoring is also perceived as being for 'solid' businesses with good years of trading: not so. Factoring is as much for the growing company with cash flow problems as it is for well run solvent concerns. In fact, with factoring you also get the benefit of the factor's customer vetting and cash collection skills which means you can lean on them for this specialist skill as a no-cost service.