Unlike crediting, factoring financing does not need collateral.
It is enough to supply with deferred payment. After providing Factor with documents (invoice, sales invoice, power of attorney), which demonstrate the implementation of the delivery, the Factor transfers funds to the Client’s account.
Thanks to factoring financing increases the velocity of circulation of working capital.
The client can get funds immediately after the delivery, rather than wait until the end of the term (from one to three months).
Factoring gives additional competitive advantages
The main task of factoring is to ensure the company’s work in such a way that the company did not have the shortage of working capital while providing a delay of payment to its customers. Also, with the help of factoring, the client is able to provide its customers with deferred payment without appreciable loss of velocity of working capital circulation.
The size of factoring financing increases depending on the increase of the sales volumes of the client. Factoring allows you to receive funding in the amount of 60-90% of the supply. Factoring financing is provided regardless of the size of previously obtained bank loans.
Control of receivables
As it is known, the most effective management of accounts receivable is only possible in the implementation of an independent and continuous monitoring of the debt state. But not all companies can afford the cost of a separate department, which will deal with the control of the timely collection of receivables. Therefore the Factor monitors the status of assigned receivables from customers, checks reputation and payment discipline of debtors, ensures that the debt is repaid on time and in full. Also the responsibility of the Factor is to provide the client with reporting of accounts receivable, which allows to use staff working time more efficiently.
Increases the velocity of circulation of working capital
The client does not wait for the expiry date (one to three months) of the trade credit. The client is able to provide its customers with deferred payment without appreciable loss of velocity of working capital circulation.