Dear sir, madam, I've heard that companies in the United Kingdom can leverage their invoices for cash flow through factoring. Could you briefly explain how factoring exactly works?
Yes, factoring is a great source of cash flow, especially for startups with no credit history or small businesses that have trouble getting a bank loan. Basically you turn over your unpaid customer invoices to a factoring company, which advances you 80-90% if their value right away and pays the remainder once the customer’s bill is paid. This service is available in the UK as well as in continental Europe. There are several specialised factoring companies in the UK. I recommend you start by asking for quotes to get a sense of what to expect in terms of fees and other considerations.