Friday, February 27, 2009

Invoice Factoring

What is Invoice Factoring?

Factoring is the term used for selling future credit or outstanding debt receivables. When your company is owed money which is past the agreed date for settlement, you can use invoice factoring to acquire upfront payment from a third party service provider, which will subsequently attempt to recover the owed debts and keep them. This is not the only option for debt collection – Collection on commission, whereby you pay a percentage of the amount collected rather than hand over the ownership of the debt, is also possible.

Obtaining Fair Invoice Factoring Services

Some service providers pay way below the average rate for factoring services, and should be avoided. The good thing about a commission system and outsourced collection is that you pay a set percentage of debts received to the collection agency, and do not have to pay anything when a debt collection attempt is unsuccessful. When you do not have time or resources to spare on pursuing outstanding debts yourself, it makes sense to entrust invoice factoring or third party debt collection to professionals.