Understanding the advantages and disadvantages of debt factoring and how the process works

Award winning debt factoring company in the UK.

Get a no obligation quote online or call us on the number below to have a chat with one of our debt factoring experts.


Advantages of debt factoring:

  • Improved cash flow - release money tied up in unpaid invoices and boost your cashflow
  • Save time- relieve your business of the burden of credit control and concentrate on your core business
  • Bargaining power - debt factoring can help you to negotiate better terms with your suppliers
  • Faster growth - grow your business at a much faster rate due to the flexible funding line

Disadvantages of debt factoring:

  • Reduces overall profit - the factor always charges a percentage of the overall invoice value
  • It's the solution to only one problem - factoring solves just one problem - cash flow limitations due to clients paying later than they should be. It should therefore only be used to solve this problem, rather than business loans and lines of credit which can be used to help with all sorts of business needs

What is debt factoring?

Debt factoring is when a business sells its accounts receivables to a third party at a discount, enabling companies to immediately unlock cash tied up in unpaid invoices without having to wait the usual payment terms. The third party pays the business a percentage of the total amount originally charged to the client and usually takes full responsibility for collecting the payment from the buyer.

As your debt factoring company we will pay your business a percentage of the total amount charged to the client, taking full responsibility for collecting the payment.

Debt factoring is basically another term used for invoice factoring.


How does debt factoring work?

Debt factoring is a form of business funding and uses one of the most significant assets your business has - your accounts receivable.

1

Your debt factoring provider will chase the debtors for payment of the invoices and collects the full invoice payment from your customer and pays you the outstanding amount, minus a small fee.

2

The business will be given up to 90% of the invoice value almost immediately from the point of raising the invoice, therefore reducing the cash deficit for the small business.

3

Debt factoring companies are proven to help businesses grow and prosper and is an excellent alternative to a bank overdraft.


Is debt factoring right for your business?

Generally speaking, debt factoring is best suited to companies that sell to other businesses on credit terms, and turnover more than £50,000 a year.

Expand your operations

Invest in stock, machinery or equipment

Employ new members of staff

Fix long-standing issues with cash flow


Debt factoring with Novuna Business Cash Flow

  • Flexibility - your funding line increases at the same rate as your turnover meaning that you don’t need to renegotiate terms.

  • Improved cash flow - release money tied up in unpaid invoices and boost your cash flow.

  • Bargaining power - Debt factoring can help you to negotiate better terms with your suppliers.

  • Faster growth -  grow your business at a much faster rate due to the flexible funding line.

  • Award-winning service - benefit from our award-winning client service.


We are an award winning debt factoring company


Our debt factoring service is highly recommended by our customers

"The communication and support has been outstanding. Providing me with all the information I needed regarding new clients coming onto our books. The system they use is so user friendly and the drawdown payments are very efficient in the fast moving world of temporary payroll."

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Please note that costs are an estimate only and are based on the entered values. Your final quote may change once a Business Development Manager has assessed your business in more detail.


Get in touch

Contact one of our debt factoring experts today on our freephone

0808 250 0859

8:45 - 17:15 - Monday to Thursday &
8:45 - 16:45 - Friday


Want to learn more about how you can boost your businesses cash flow?

Our Cash Flow Resource Hub has been set up to help SME's with cash flow finance advice, tips and resources to help with their cash flow position.

We explore ways you can begin improving your cash flow situation and start getting your business on track to positive cash flow.

Why choose Novuna Business Cash Flow?

6 month trial period

A 6 month trial period so you can be sure the product is right for you, followed by a 6 month rolling contract – we don’t tie our clients in for long periods.

Digital onboarding

We are the first in the market to offer a digital onboarding process and have been leading the way with our digital capabilities allowing clients to sign up within 24 hours from the first appointment.

Client trust account

Once you become a client you will be given your own trust account, meaning you will get same day availability on your funds. You can also view all of your invoices and payments online at a time suitable to you, 24/7.

No uncleared effects

We have heavily invested in our digital capabilities. This includes the auto allocation of payments using Artificial Intelligence. Ultimately this advance in technology means that our clients access money quicker as well as saving money on interest charges due to auto allocation.

Simple pricing

We aim to make the process of Cash Flow finance as simple and straightforward as possible. Our pricing is very straightforward to understand. For a no obligation quote or an informal chat you can call our friendly team today on 0808 250 0859.

Award winning service

We offer award-winning client services and individual Relationship Managers who are on the other end of the phone or out in the field to visit you in person.


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