Liquidity – when you need it most

Factoring is a financial service that lets you collect your receivables from buyers before they fall due. In other words, it lets you shorten the wait for payment of your receivables and get the money you need to develop your business, while the factoring company collects the funds from the debtor when the invoice falls due.

Factoring can be with recourse, where the responsibility for collection remains with you to the end, or without recourse, where the factoring company takes on the responsibility for collection and takes all measures to collect the receivable.

A company with undue receivables from its buyers sells those invoices to a factoring company. The factoring company pays the company the money in advance, less a certain commission.

The benefits of factoring for companies include:

• Faster cash inflow: the company gets the money right away instead of waiting for its buyers to pay.
• Stability: factoring helps to stabilise the company’s cash flow by providing regular cash inflows, even when buyers are slow to pay.
• Reliance on external resources: it is an alternative to traditional credit and bank loans, which can be especially useful for companies with an insufficient credit history or fast business growth.

By using the services of a factoring company you get funds without long procedures and extensive paperwork, within 48 hours. With this way of financing you do not put additional debt on your company; instead, you turn your receivables into working capital, the driver of your further growth and development.

The factoring company analyses your company, but also the company that owes you. In this way it establishes whether the business was done or the service performed, whether there is a valid receivable and whether there is the ability to settle it. Companies often use a factoring company’s services even before they start working with a new buyer, because they can get information on the creditworthiness of their new partner.