When you are running a business, make no mistake, cash is king. Of all the challenges facing the entrepreneur, generating cash and keeping it flowing can be two of the toughest. If your cash flow is suffering whilst you wait for your customers to pay their invoices, it may be appropriate to approach a factoring company.

In recent years, UK businesses have benefited from the increasing acceptability of other forms of finance outside the traditional overdraft. One such form of finance is factoring which now boasts 29,200 clients and an impressive £7.1 billion of funding being injected into small and medium sized businesses.

What is factoring?

Basically, factoring is a service whereby the factor will turn up to 85 per cent of the value of each sales invoice into cash within 24 hours. The factor will then work alongside your business to collect in any outstanding payments of those invoices from your customers. The remaining 20%, less a small service fee, is paid to the business once payment has been received.

The benefits to a business is that it not only receives an immediate cash injection into the business but it also gains access to an on-going source of funds that is linked directly to current sales.

It can improve profitability as the business can pay suppliers early, buy in larger quantities and also take advantage of any discounts that are available. Businesses using a factoring facility can also save costs on postage, stationery, telephone calls and most importantly it allows the managers to spend their time more productively developing business instead of chasing payment.

What does it cost?

There are two fees involved.

The first is for the cost of the finance. This compares favourably with the cost of a typical bank overdraft.

The second is for the service you receive which on average is between 0.5% and 3% of annual turnover but it depends on your industry and the number of invoices you raise.

Never decide on cost alone, consider the quality of the service you receive and ensure you are comparing like for like.

Choosing a suitable supplier

To help you choose a suitable factoring company to work with your business you should ask the following questions:[list]

Are they a member of The Factors and Discounters Association (The FDA)?

What proof is there that the factor is financially stable?

What percentage of your invoices will be disapproved by the factor and therefore not funded?

Who will look after my account and do I have access to the decision- makers?

Does the factor chase all your customers or only a percentage of them?

How does the factor communicate with your customers - by phone, mail or both?

Will any existing overdraft arrangements be affected?

How will they work with your customers
Are there any hidden charges?

Bibby Financial Services working with Nunn Hayward to help local businesses improve their cash flow and fund their growth. For more information either contact David Duke 01753 888211 or email david@nunn-hayward.com or call Bibby Financial Services direct on 0208 027 5320 quoting "Nunn Hayward".

ATM Scam - issued by Halifax Building Society The following advice was received via e-mail by many members of staff and partners at Nunn Hayward. Advice from the Halifax on the latest ATM scam. The latest ATM scam involves thieves putting a thin, clear, rigid plastic 'sleeve' into the ATM card slot. When you insert your card, the machine can't read the strip, so it keeps asking you to re-enter your PIN number. Meanwhile, someone behind you watches as you tap in your number. Eventually you give up, thinking the machine has swallowed your card and you walk away. The thieves then remove the plastic sleeve complete with card, and empty your account. The way to avoid this is to run your finger along the card slot before you put your card in. The sleeve has a couple of tiny prongs that the thieves need to get the sleeve out of the slot, and you'll be able to feel them.

Gerrards Cross Fun Run - 19th May 2002 The Fun Run is only two weeks away and the Nunn Hayward team are busy training for this 5k run through the streets of Gerrards Cross. As main sponsors Nunn Hayward will also be manning the tombola/raffle marquee on the day. There are some fantastic prizes up for grabs so do come along and visit us. If you would like to purchase raffle tickets or require entry forms for the fun run contact kathy@nunn-hayward.com. All proceeds are being donated to the Teenage Cancer Trust.

Please contact us to discuss the above further Tel: 01753 888211 Fax: 01753 889669 Email: abacus@nunn-hayward.com Nunn Hayward, Sterling House, 20 Station Road, Gerrards Cross, Bucks SL9 8EL.

Registered Auditors, Licensed Insolvency Practitioners and authorised to carry on investment business by the Institute of Chartered Accountants in England and Wales.

This publication has been prepared as a guide only to topics of current financial and business interest. No responsibility for loss occasioned to any person acting or refraining from acting as a result of any material in this publication can be accepted by us. All rights reserved.

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