Invoice Factoring - straight and easy?

[AndyF85]

Hi all,

As part of my business i am importing packaging from China which is used in the food industry

Its the sort of tray/box packaging you see in food sections in cafes and eateries etc. The customers may pack them in store (like a deli) or at a packing factory (like a chain foodstore)

I want to be able to bring these products in bulk, bring them to our warehouse, and sell them wholesale either to the big food packing facilities or to a distributor who can sell them in smaller quantities to smaller independent food outlets.

I am happy to give away part of the my profit to be able to get the cash quickly and bring in a new order, and i think the calculations would make it more profitable to do so in terms of return on investment.

However, how straight forward is it? In my business plan for this line of goods, can i just put that all my sales will be done by factoring? Or the majority? Or a case by case basis?

I'd even be happy not to deal with people if factoring wasn't feasible.

Is it a case of the bank looking at the partner company and seeing how credit worthy they are? I read somewhere that maybe there needs to be some history of sales between our company and any potential customer who i would like to have invoice factoring with?

I've read that the cut is between 0.5-5%. What are the variables that determine this? Is it my/customers credit worthyness? Is it dependent on product type?

I read somewhere that i may still be accountable for the invoice that i'm factoring in some cases (which seems like a complete non-starter for me)?

What are peoples experiences with invoice factoring in order to get the best possible deal from the banks to help cash flows?

 

[Mark T Jones]

@Ian J is your man

 

[Ian J]

Thank you Mark.

As long as your sales are all to businesses I see no reason why you can't factor all of them whether you have dealt with them before or not. The rates will vary dependant on turnover, number and type of customers etc and most factoring facilities are with recourse so if your customer goes bust the risk is with yourself but non recourse facilities are available if you wish.

If you wish to discuss in greater detail my contact details are in my signature and I would be only too happy to speak to you in confidence off forum

 

[Neil Lukins]

Hi Andy,

With over 18 years Invoice Finance experience I've come across many Businesses similar to yourselves.

As Ian mentions above all lenders will base their fees on many variables - turnover, credit worthiness of both you and your customer, workload (price will differ if you have 10 or 1,000 debtors).


If you need help to purchase stock from China most of our Clients use a combination of Trade Finance and Invoice Finance (Factoring). This allows you to have a full funding solution from start to finish.

If you would like to discuss offline in further detail my numbers are below.

Neil