Leasing factoring
is a hybrid method of financing businesses and is a highly flexible
method of providing improved cash flow. With leasing factoring
the amount of funding available increases as the business grows, as
more invoices become available to enter the factoring process.
It is nevertheless
very similar to factoring or invoice discounting. Under such a lease
or leasing factoring facility, sales invoices are taken by the leasing
factoring company for about 85% of the value of the invoice and this
cash is immediately released to the client. The cost of this is comparable
to an overdraft (around 2% or so above the base rate) and the factor
assumes all credit control responsibilities. So he chases your debts.
There is also the advantage over other forms of financing such as loans
that you do not have to put up any other assets as collateral.
Leasing factoring
may enhance cash flow in a number of scenarios:
- Company purchase
of its own shares
- CVAs
- Management Buyouts
- Business expansion
- Phoenix company
or as part of a Pre-Pack Administration
- Accelerated business
expansion
- To replace your
business overdraft