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Aug
29
2011

Factoring for Small & Medium Business

Nova Cashflow Solutions

Factoring

Factoring is a fantastic product for SME’s and even micros businesses. It works well for contractors, owner operators, wholesalers, service businesses, in fact almost any business that sells to their business Customers on credit terms.

Bank Debt Word Cloud
Creative Commons License photo credit: Vectorportal

How Does it Work?

· The customer raises an invoice, which has instructions on it to pay the NBF directly and sends it to the Customer and factor.

· After receiving a confirmation of the invoice, NBF pay cleared funds into the Clients bank account (usually 80% of the invoice amount).

· NBF issues statements to the customer on behalf of the Client. It operates credit control procedures in conjunction with the Client including telephoning the customer if necessary.

When an invoice is paid by the customer

· The customer pays of the invoice directly to the NBF.

· NBF pays the balance of the invoice to the customer less any fees and charges.

When an invoice is not paid

If an invoice is not paid, the debt is then recoursed at 90 days and becomes re – payable by the Client

Fees

For factoring, charges are as a percentage of the invoice amount and varying form Client to Client depending on the number of invoices and the average size of the invoice but a reasonable guide is that it will cost 2% to 4% of the invoice amount assuming usual commercial payment terms. If the Client can accelerate their trading, expand their business or get discounted prices for their input costs, this cost is easily covered in the business.

Visit us at www.nbf.com.au

For more information contact jeremy@nbf.com.au

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