For Scotland-based businesses that witness significant growth and find a benefit in having access to more readily available finance, Scottish invoice factoring is a realistic alternative to a conventional overdraft or loan. Factoring offers more flexibility, as well as providing a mid-long-term perspective on how a business’ accounts process can be streamlined – as opposed to accepting a lump sum with an arrangement to pay the balance in instalments.
The first point required is to locate a Scottish invoice factoring company that a business can feel comfortable with. We at Invoice Finance Scotland are an invoice factoring company based in Scotland, and services can vary widely from company to company. Some are more inclined to deal with high-turnover companies, while others prefer to work with smaller companies and start-ups.
The first step a Scottish invoice factoring company will typically take will be to audit a business’ books and accounts, to ascertain whether or not the sales ledger fits with requirements. When both the business and the factoring company are satisfied that the relationship can move ahead, they will create an account, enabling a business to make customer invoices payable to them. An agreed-upon proportion, typically 85 per cent of an up-front invoice value, will be paid to the business. The balance will be paid after the cost of the service is deducted, once the payment has been received by the factor.
There are a number of advantages which Scottish invoice factoring provides; in particular, the fact that businesses have access to cash whenever it is needed, and cut down on the time spent on debt collection. You could also raise up to 85 per cent, or even more, on any invoices that remain outstanding, whereas an overdraft secured against invoices would only allow businesses to raise a maximum of 50 per cent.