Bad debt in Factoring

I am having a problem calculating savings of bad debts so my question is that could you please tell me what is the correct % for saving of bad debts? Is it 3% or 2%? Isn't that correct the difference between these two %age would be the saving of bad debt such as 700,000 x 1% = 7000? [Question] Velmin Co has a turnover of $700,000. Receivable days are currently 48 despite the company only offering 30-days’ credit and bad debts are currently 3% of turnover. Velmin Co finances its receivables using its overdraft which has an annual interest cost of 8%. Velmin is considering the use of a factor. The factor would charge 4% of turnover for a non?recourse agreement and would expect to reduce receivable days to 34 and bad debts to 2%. The factor would lend Velmin 75% of the outstanding receivables and would charge Velmin 1% above their current overdraft interest cost. It is anticipated that using the factor would reduce administration costs by $6,000 per annum. Required: Evaluate whether or not Velmin Co should use the factor.