You’ve heard of the Krypton Factor. You’ve heard of the X Factor. But you may not have heard of the invoice factor, so let me enlighten you.
Factoring is a nicely corporate way of keeping your business’s cash flow going. It works like this: you invoice out a gazillion pounds. Ordinarily you have to wait a month or more before your customers pay. Before that happens, you likely have bills to pay. You certainly have staff who want their wages. And while you’re twiddling your thumbs for your money to come in, your cash flow is probably suffering. Certain business sectors are more prone to customers taking a while to pay, which increases the potential problems of your current account being drained by suppliers. One such area is the supply of agency nurses, where the NHS are notoriously bad payers. Factoring takes the worry out of the equation, in return for ouch-inducing fees. The factoring company gives you a percentage of the money you’re owed upfront, and then hand over the rest when the invoice is actually paid, deducting their fee in the process. In practice, this means that you’ll get somewhere between 70% and 80% of the invoice money (depending on the factoring company) as soon as you inform them of that week’s invoicing total.
Anyway, that’s a very long-winded of saying that I did some factoring today. I rearranged the pile of invoices from Tuesday into client order (as Chekhov memorably said – no, not the Star Trek guy -: “Never introduce a gun in act one if you don’t intend to fire it later”), wrote out a great big factoring list with a total on Excel, and then went onto the RBS Facflow system to input the details. The variant of factoring that the nursing agency uses is called Invoice Discounting, where only the total is needed and we do the credit control work ourselves. The alternative, where every individual invoice amount has to be supplied and RBS do the chasing for money themselves, was tried for a long while and… well… wasn’t exactly the most amazing experience. I won’t say any more for fear of being sued for libel. Because, yes, you can apparently lose a libel case even if what you say is entirely true.
The factoring complete, I then rejigged the invoices into number order and entered them all onto Sage Line 50. There was a bit of calculation required for each of them in order to separate the commission element from the rest of the invoice, as it has to be assigned to a different nominal code in the program for reporting purposes, see.
And that was it, agency-wise, as I had four other payrolls to run and various emails to answer. Never rains but it pours…
Tomorrow I post the invoices out, but am visiting a client in town first. A blog entry will probably follow, for completion’s sake. And then this torture of describing work will end.