Invoice factoring myths for bodyshops debunked: separating fact from fiction

Invoice factoring has been growing in popularity with bodyshops to quickly fund their insurer and network-approved repairs. However, there are huge misconceptions surrounding invoice factoring. Many see it as a sign that your bodyshop is financially struggling, and you need quick access to monies owed to clear debts. But this couldn’t be further from the truth. Let’s explore this in more depth.

What is invoice factoring?

Invoice factoring, also known as accounts receivable factoring, is a type of debt finance in which a business sells its account receivable invoice to a third party who will deploy payment of the funds directly back to the business (less a discount). The primary use of this function is to improve cash flow.

One example would be if a bodyshop wants to avoid long invoice payment terms imposed by insurers and networks, they could factor the invoice and get the money back into the business quicker.

The benefits of invoice factoring

There is a huge array of benefits for bodyshops to utilise invoice factoring as a source of financing their operations. Primarily, the benefits of boosting cash flow are the first thing that comes to mind, through factoring bodyshops are able to inject cash quickly into their business, often within 24 hours of the invoice being processed, ensuring there’s a steady flow of cash moving through the business enabling them to meet its financial obligations.

Plus, factoring takes away the time and stress out of the bodyshop from chasing monies owed to them. This frees up resources enabling them to focus on more business-critical tasks, such as growth, training and so much more.

Common invoice factoring myths

Here are a few common myths surrounding invoice factoring, let’s bust them:

1. Invoice factoring is too expensive – Not true! Typically, factoring companies charge a nominal percentage for their fee. Responsible partners, like ACG, only charge a small percentage fee based on the net value of the invoice.
2. Factoring companies are like debt collectors – Not True! Once a bodyshop has received their payment, their supplier is no longer indebted to them. The factoring company then chases the debt. Partnering with the right factoring company, like ACG, who have brilliant relationships with the majority of UK insurers and accident management networks, they have systems in place to ensure that everyone is dealt with in a professional manner.
3. It’s only for struggling bodyshops – Not True! There’s a diverse range of benefits of factoring invoices, and any switched-on / successful bodyshop knows that. It’s not just an option for failing bodyshops, but ones who have a desire to grow their operations and expand.
4. Factoring ruins customer relationships – Not True! Partnering with a reliable and trusted factoring company, like ACG, enables bodyshops access to over a decade’s worth of experience in dealing with the motor insurance claims industry. Having that positive relationship enables bodyshops to ask questions, and gain guidance and support – ensuring they’re getting the most out of it for their business.

How to choose the right factoring company for your Bodyshop.

Finding the right partner to factor your motor insurance or network invoices is crucial, as the relationship between both companies needs to be open and professional. You don’t want to engage with a factoring company that’s hidden extra charges from you or expects a minimum monthly quota of invoices to factor.

Partnering with ACG there are no hidden extra costs, there’s no minimum monthly volume, and no pressurised sales calls. ACG runs a unique pay-as-you-go system, only expecting to receive the invoices their customers want to factor. Plus, they offer preferential rates through a contract agreement, enabling bodyshops to maximise their opportunities and get the best out of the working relationship.

With over 10 years of experience, 100s of bodyshops from across the UK have partnered with them to fund their invoices, enabling them to receive payment within 24 hours!

Invoice factoring myths, busted!

So, there you have it, it’s really that simple. Factoring isn’t for failing bodyshops, it’s not expensive and it doesn’t ruin relationships! As long as your bodyshop partners with a trusted and experienced factoring company, they will benefit from improved cash flow, focus their attention on growth, and remain financially agile.

Partner with ACG

ACG is the leading invoice funding company in the UK for bodyshops, our extensive network and experience enable bodyshops to receive funds quickly, gain access to their expertise, and focus their time and energy on critical responsibilities. Don’t just take our word for it, check out our customer success stories on their  case studies page.