Finding the Best Deals for the Factoring Process

Factoring is a short-term financing solution for companies in the B to B sector: transport, trading, IT, transport, etc.This technique is often poorly known or even poorly seen by business leaders. Yet it can cope with some cash flow difficulties and is quick to implement.

In this category, we will give a definition of factoring, also called factoring, specify the advantages and disadvantages but also mention the different forms. The Interstate Capital is one of the factoring companies and the work that they do is perfect.

All companies (VSEs, SMEs), associations or institutions with a number can use factoring. Your clients must be private or public companies with a company too. You cannot set up a factoring contract for companies working with individuals (Business to Customer). Factoring therefore concerns companies working in B to B (business to business) only. For a long time, factoring, had a bad image, often associated with companies in difficulty.

  • Today, it is a real financial technique that allows companies to finance their growth when the usual players such as banks can no longer support them.
  • Managers are often afraid to resort to factoring with their clients: “What will they think if I put my invoices to the factor?”
  • Yet many famous international groups use factoring. It’s a financing technique just like the bank discount or the Daily.

Do you know that 25% of balance sheet deposits are linked to unpaid customers?

Thanks to factoring, you will be able to guarantee your receivables without being exposed to the risk of default of your customers. You will be able to query the factor about your potential customers to see if they are reliable.

Example of a company using factoring:

  • Example Company offers medical equipment to its customers (large groups, communities and SMEs).
  • In order to be able to control his BFR (Working capital requirement), the company Example could not accept and honor all the quotes for lack of cash.

Indeed, how to buy goods when you do not have the funds and that we know that his client will not pay before 60 days end of month after installation?

Factoring allowed him to honor all of his orders since as soon as the invoice was issued, the Example company received within 24 hours the payment of 80% of the amount inclusive of the invoice of his client. In addition, the example company knows that it will not have to bear the risk of default in the event of the failure of one of its customers.The development of the turnover is thus perpetuated and there is no longer a waste of time with customer reminders since the factoring company deals with this point as well. So you can focus on your first job: the success of your business.

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