Factoring Articles

Three Tips to Maximise Your Chance of Approval for Invoice Factoring

 Following are three tips in a series to maximise the chances of getting approved by a factoring company if you are seeking working capital:

1) Provide a clear audit trail - A factoring company must understand the way that the paperwork concerning a sale flows through your business, so here is an ideal audit trail. The paperwork for a specific transaction would start with proof of an order from the customer. Then there would be evidence of delivery for the provision of products or services, followed by an invoice. These should be filed with any remittance's that are received from the customer once the payment comes in. A clear audit trail prior to applying for a factoring facility will enable the factoring company to see the evidence of historic transactions to support future transactions.

2) Make sure to Tidy up Your Sales Ledger - It will improve your chances of being approved for factoring if you tidy up your sales ledger prior to making your application to the factoring company. Chase outstanding debts in order to minimise the level of overdue invoicing, as this usually deters factoring companies. Also, any credit notes due should be issued and any old bad debts should be clearly identified. Bring the chasing notes associated with your sales ledger up to date so that the factoring company can evaluate the sales ledger.

3) Keep Your Trading Simple - Most factoring companies are looking to ensure that the underlying debts against which they providing funding are simple and straight forward, hence easy to be collected. It is common for factoring companies to suggest that respective clients alter the way in which they trade in order become more suitable for factoring. By taking these steps prior to speaking with a factoring company like the Interface Financial Group (IFG), it will enhance your approval chances. Ensure that invoices are only raised after the goods have been delivered or the services provided.   Provide documentation to support the debt, such as proof of delivery or proof of provision of the service. 

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