Businesses do need to meet some requirements in order to be considered for a factoring contract. One of the most important criteria is B2B trading (trading with other businesses rather than an end user) and that invoices raised for goods or services need to be for a reasonable amount. Typically a minimum turnover of £100,000 is also required (although some factors will consider smaller businesses or start-ups). Other requirements usually include being able to prove that debts can be collected within a practical timescale, a minimum or maximum amount of invoices a month and credit terms that meet industry guidelines.
An additional question: Respond to this Question
- How can factoring help my business improve cash flow?
- Can I pick and choose which invoices are factored?
- How does a factor determine which invoices to accept?
- What's the difference between factoring and invoice discounting?
- What does a typical factoring contract contain?
- How much cash will I get up front for my invoices?
- What is reverse factoring?
- What are the different types of factoring?