The Main Benefits of Financial Services Such as Factoring and Asset Financing for Your Business

One of your main tasks as a business owner is to make sure that all your bills are paid on time. In addition to this, you also have to make sure that you have enough immediate cash available in order to pay for whatever expenses you may have. But if you are finding it increasingly difficult to manage your cashflow and your expenses and you still need to spend for business equipment and other assets, there are two types of services you can take advantage of: factoring and asset finance.

What is factoring, and how does it work?

You may have already heard of factoring but are not sure how it works and have not benefitted from it yourself. Basically, factoring provides you with financing based on your sales invoices or ledger. If you are an enterprise doing business with other traders on credit, then factoring may be just the solution you need for your cashflow problems.

Once you sign an agreement with a factoring service, they will normally give you an advance on your invoices of up to 85 percent. The balance will then be paid when your clients or customers pay the debt they owe you.  Factoring is increasingly being seen as a more feasible alternative to getting a bank loan for various reasons.

The benefits of factoring 

The main (and most obvious) benefit of factoring is that it can give you an immediate boost to your company’s cashflow. For instance, if your clients owe you £500,000, then factoring can give you £400,000 (even more) in several days.

Another benefit of factoring is that it allows you to focus more on what you have to do for your business as you no longer have to worry about where you will get your business’ capital. Factoring also allows you to plan your finances better, and helps you more adequately plan the growth of your business. The right factoring service may even provide you with relevant information about your clients’ credit situations and help you come to better payment terms with your business suppliers.

What is asset finance, and how does it work?

On the other hand, if you need to purchase assets for your business and you do not have the available capital, you can also benefit from asset finance. Asset finance is when a cashflow and financial service institution such as Ultimate Finance purchases the asset you have in mind and you can simply make set monthly payments to them in return. This type of agreement usually extends for two to five years, and at the end of the term, you can choose to buy the asset for a small price as well.

The benefits of asset finance

An asset finance service offers several benefits. One of these is that it allows you to preserve whatever available capital you have (instead of spending it on an asset purchase) so you can use this capital for other activities and expenses. Asset finance also allows you to grow and expand your business with your new assets and acquisitions, giving you a more stable standing with your customers as well.

With both factoring and asset finance, you can help grow and improve your business and enable it to run smoothly without any worries about your financial resources. But it is also important to choose the right factoring and asset finance partner so you can be assured of a service that can give you exactly the security and stability your enterprise needs.