If you extend credit to your customers you are effectively providing finance to them for the credit period.

If your business does not have the cashflow to support the credit it has extended you could be just one bad debt away from insolvency.

In situations like this factoring, invoice discounting and P2P lending can sometimes be a lifeline for business.  But with such a wide variety of solutions offered in todays marketplace finding impartial information on your suitability can be difficult.

Thankfully the ICM and BIS have just the thing in part six of their series on Managing Cashflow.  The guide includes the by now ubiquitous yes or no checklist on suitability as well as six top tips to help ensure you get exactly the right product for your company.

The guide can be downloaded by clicking on the cover below:

 Our MD Sid Home has this to say on the subject of Factoring and Invoice discounting:

“Whilst receiving immediate funds against invoices issued can be an attractive proposition for some businesses. Companies considering invoice financing may well find the answer to their cashflow problems can be found in the other issues of the Managing Cashflow guides from the ICM and BIS.

Invoice finance is not a magic bullet and potential customers should weigh up the advantages and disadvantages to their business carefully.  If you are convinced that finance is right for your business make sure you vet your supplier fully and independently review recommendations from satisfied customers.

And remember once a company starts to finance its sales ledger it can often be difficult financially to stop.”

The Managing Cashflow series of guides is produced by the Institute of Credit Management in association with the Department for Business Innovation and Skills.  The full series of guides can be found here.