Factoring is a simple and flexible instrument for the financing of accounts receivable, which does not require the pledge of assets. The financing of invoices is based on the transfer of a claim (debt and receivables) to the factoring company for a certain fee.
In order to ensure the speedy transfer of cash to the client, factoring does not require any other collateral because the invoice itself acts as a collateral.
BENEFITS OF FACTORING FOR THE SELLER
- Possibility to receive financing without the pledge of assets.
- Improved cash flows as the receivables are replaced by cash in seller’s account.
- Increase in sales (limited financial resources and long collection period of receivables hamper the growth of turnover).
- Effective collection of money reduces the proportion of doubtful receivables.
- The administration of receivables is transferred to the factoring company along with the claim.
- Enables longer payment terms, which benefits both the buyer and the seller.
BENEFITS OF FACTORING FOR THE BUYER
- Allows the supplier to postpone the payment date.
- Helps to attract smaller suppliers because funding is insured.
- Facilitates planning of cash flows.
- Increases financial liquidity of the company and unties working capital.
All it takes is four simple steps:
- The seller sells the goods and/or provides the services to the buyer.
- The invoice issued to the buyer is also submitted to the factoring company.
- The factoring company transfers an advance payment to the seller, which may be up to 100% of the invoice amount, minus the interest and related fees.
- After the factoring company receives payment from the buyer, the balance, if any, is transferred to the seller.
Essential notes on the services of SME Finance:
–We provide funding for up to 100% of the invoice
–We make an offer in 1 hour
–Our financing limit is from EUR 10,000 to 5,000,000
–We offer competitive interest from 0,5% (for 30 days)
–We provide invoice financing for up to 180 days
–We can offer factoring derivatives (reverse, export, stock, confidential factoring)
–We provide financing to clients who have loans from other financial institutions.