BPPG launches new factoring information on website

Many businesses suffering from persistent late payment of invoices by their customers choose to engage a factoring company as a means of freeing up working capital. The BPPG has launched new information on this website to explain in more detail the services that a factoring agent can provide.

In addition to improving cash flow, the use of a factoring company means the business is able to cut down on the amount of time it spends chasing outstanding debts, allowing it to concentrate instead on generating new customers. At the same time, the business is also benefiting from professional sales ledger management, which helps get invoices paid more quickly.

As with any good credit management strategy, communication with customers is key. Businesses new to factoring can be reassured that their customers will be properly informed of the new arrangements concerning their account. The customers will normally be required to pay the factor who will ensure the business is kept informed of all cash collections made from their customers.

It is normal practice for factoring companies to send an introductory letter on behalf of the business to existing and new customers.

The key points include:

• Where payment should be made and how;
• The name and address of the factoring company;
• The date from which the new arrangements will take effect;
• A contact point for any queries about the arrangements.

David Marsden, member of the BPPG representing the Factors and Discounters Association commented: “If you decide that factoring is right for your business, it is important that, together with the factoring company, you take proper steps to reassure your customers that your relationship with them remains unchanged. Good communication will help to avoid any confusion and will allow the new arrangements take effect quickly and smoothly.”

To view the information about factoring, click here

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