Factoring works like this:
- The factoring company manages your sales ledger and provides you with credit control and collection services of all your outstanding debts.
- The invoices you issue to customers is sent to the factoring company who advance up to 80% (and sometimes more) of the invoice amount to you. The balance, less any charges, is paid when the customer makes payment directly to the factoring company.
- Your customers are advised of the service because they will receive a letter from the factoring company with their invoicing, asking that the payment be directed to them.
- The factoring company typically releases funds within 24 – 48 hours after the invoices have been issued.
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