What is Factoring?

Factoring is simply using your Debtors Ledger to provide immediate cash flow for your business.

How Factoring Works

•  The Factoring Company purchases your Debtor invoices 
    for immediate cash.

•   The Factoring Company will factor up to 90% of the face
     value of your debtors ledger.

•   The balance is payable to you on collection of the invoices
   

•   The factoring period is normally up to 90 days
   

•   The Factoring Company charges you interest for the cost
    of funding plus an administration fee for the management
    of your debtors ledger.

• Overdraft Stays Flat
  An overdraft from the bank is normally for a fixed amount and as your business grows you have to reapply for a larger overdraft facility.
   

• Cash Requirement Increases
  Many businesses fail because their immediate cash requirements out grow their cash flow. Financing the business becomes a problem because most lenders will only lend on bricks and mortar.
   

• Ledger Increases
  With factoring all your immediate cash needs can be met from your most valuable asset which is your debtors ledger. When you use your debtors ledger to finance the growth of your business then and only then will your immediate cash requirements be met.

This Simple chart shows what happens when you use Cash Flow Finance
(Factoring)
 

We thank Scottish Pacific for the use of this graph

TEN BENEFITS OF FACTORING

1. Provides Immediate Cash flow.
    

2. Improves Purchasing Power.
    

3. Enables Cash Flow to Grow with Turnover.
    

4. Provides Cash for Expansion & Restructuring.
    

5. Reduces the Highs and Lows of Seasonal Income.
    

6. Reduces the Need for Bank Overdraft Facilities.
    

7. Replaces the Need for Property as Security.
    

8. Reduces Office Administration Costs.
    

9. Eliminates Time Spent Chasing Slow Payers.
    

10. Provides Access to On Line Reports.

• Do you have a need for Better Cash flow?
   

• Do any of the above Ten Benefits apply to you?
   

• Could you get Better Buying Discounts by paying your suppliers early?
   

• Would you like an Alternative to a Bank Overdraft
   

• Would you like to have Less or No Bad Debts?
   

• Would you like to introduce a Hassle Free System of credit control into your business?

If your answer to any of these questions is Yes then Click here

As factoring brokers our job is to introduce you to the concept of factoring. Factoring is simply the financing of your debtors ledger to provide cash for your business now. If you show an interest in factoring then our job is to obtain sufficient information about your business to obtain a quote for you.

We work with three of the major Factoring Companies in New Zealand, namely Scottish Pacific Ltd, Orix New Zealand Ltd, Commercial Factors Ltd.
All these 3 Companies are leaders in the industry.

Once we find the Factoring Company most suited to your needs then we will prepare an application to that company for funding.

Most of the factoring companies will a have clause known as recourse. That means that if any of your Debtors do not pay within the agreed time period then they will debit your account with that amount and it will be up to you to collect the debt.

As debt collection agents Debtor Communications would be able to do that job for you. We are specialists in the debt collection industry and we can provide you with a full credit management service.

• Debt Collection

• Credit Reports

• Cash Flow Advice

• Credit Consultancy

The cost largely depends on the turnover of your business as well as the number and size of the invoices. The type of business etc is also taken into consideration.

There are two fees applicable.

1. Administration fee: for the cost of managing your ledger.
    

2. Discount fee( interest): for the cost of funding.

The industry is reasonably competitive so we can usually get the best deal for our clients. The cost of funding is generally in line with current bank rates.

How do we find out more about Factoring?

You may phone us on 0800 332 826