Debtor financing gives a business the ability to get paid upfront on long-term invoices. There are two types of debtor finance:
Invoice Factoring: After setting up an invoice factoring agreement with a creditor, a business can submit invoices to the lender to receive 80-85% of the invoice amount upfront. The lender will assist in payment collection where necessary, and pay the outstanding amount (15-20%) less their fees upon receipt of payment.
Discount Factoring: Discount factoring works in a similar way to invoice factoring, however does not provide additional services to the business, such as collections assistance.
Debtor finance can help small business expand faster by providing quick capital. If you think this could help your business, please talk to us about how we can help.