Invoice Factoring 101: A Comprehensive Guide for Bodyshop Owners

Managing a bodyshop’s finances is a delicate balancing act. Between ensuring funds are available for ongoing repairs and chasing payments from insurers, financial management can quickly become a major headache. However, this doesn’t have to be the case.

By strategically implementing invoice factoring, bodyshops can save time on chasing payments and maintain a healthy working capital to cover repair costs. But where do you start?

In this “Invoice Factoring 101 Guide,” prepared by ABP Club and ACG, you’ll learn how to make the most of invoice factoring.

Understanding Invoice Factoring For Bodyshops

Invoice factoring is a financing method where a company sells an outstanding invoice to a third party. This approach significantly improves cash flow since payments are often made within 24 hours, allowing business owners to focus on other areas of their business.

Unlike traditional debt financing, invoice factoring with a reputable provider like ACG means your bodyshop’s best interests are prioritised.

Ian Budsworth, Managing Director at ACG, explains the process: “Working with us is straightforward. Once a customer is set up and all checks are completed, we’re ready to fund. We understand the importance of quick payment for our bodyshops, which is why we process invoices swiftly.”

For the past 15 years, ACG has been the leading invoice funding partner for bodyshops, ensuring prompt payments and easing cash flow concerns.

Benefits of Invoice Factoring for Bodyshop Owners

Despite some misconceptions, invoice factoring offers numerous advantages for bodyshop owners when used correctly:

• Improved Cash Flow: Immediate access to working capital means owners aren’t shifting debt to cover parts and repairs. Instead, they have full control over their money without relying on expensive credit options.
• Flexibility: With no long-term debt, your bodyshop’s balance sheet remains strong, positioning you better for future investments and growth. Partnering with a factoring company that offers pay-as-you-go services, like ACG, allows you to choose which invoices to factor.
• Focus on Growth: By reclaiming time spent chasing payments, owners can focus on expanding their business, investing in new equipment, staff, and marketing.

The Invoice Factoring Process For Bodyshops

Factoring invoices is a straightforward method to quickly inject money into your business. ACG’s Customer Relations Manager, Andy Massey, describes the process: “Once due diligence is completed and the payment pack is processed, we’re ready to fund. After the bodyshop submits the payment pack, we handle payment processing, flag any errors, and ensure the money reaches our customer as soon as possible.”

ACG’s strong relationships with most UK repair networks and insurance companies ensure that cases are handled professionally and efficiently.

Costs and Fees Associated with Invoice Factoring

Factoring fees vary, so it’s crucial to compare structures carefully. Fees can be as low as 3% dependent on who you use. However, compared to other financing options, partnering with a factoring expert like ACG is a cost-effective route for automotive trades.

Selecting the Right Factoring Company

When choosing an invoice funding partner, consider the following:

• Industry Experience and Specialisation
• Reputation and Customer Service
• Terms and Flexibility

Before reaching out, prepare questions to benchmark companies against each other. Consider asking about fees, service structures, and the collections process.

Real-Life Example

Invoice factoring is no longer just for struggling businesses. Today, progressive bodyshops with growth ambitions are utilising this financing option.

Lewis Barker from Europa Crash Centre explains why he chose invoice factoring: “It was a no-brainer. Due to the nature of the industry, we recognised throughout the years that cash flow was potentially a big issue due to the influx of invoices on repair jobs and general business expenses, it was hard to keep up and we found ourselves struggling to find the time to chase invoice payments effectively. After being introduced to ACG, we quickly realised that they were one of the only companies of their kind that knew the industry inside out.”

Tips for Maximising the Benefits of Invoice Factoring

Once you’re up and running with invoice factoring, keep these tips in mind:

• Maintain Good Records: Accurate records provide better visibility of incoming payments.
• Build Strong Relationships: Money is the lifeblood of any business, so maintaining a good relationship with those managing your payments is essential.
• Plan for the Future: Utilising invoice factoring can broaden your bodyshop’s financial strategy, unlocking growth potential and new revenue streams.

Conclusion

This guide should give you a broader understanding of how invoice factoring can benefit your bodyshop’s operations. It’s not just for under-performing businesses but is an invaluable tool for thriving bodyshops focused on growth.

For those interested in exploring this financing option, reach out to the team at ACG for further details.

Additional Resources For Bodyshops

Further Reading: Discover more about bodyshops that have successfully integrated Invoice Factoring into their businesses via the case study page on the ACG website.

Contact Information: Contact ACG on 01925 591 566 or email info@acg.co.uk.

Thanks to the team at ABP Club for the support with writing this article! Be sure to visit the brand-new ABP Club Website.