Factoring is a complex of services:
funding
accounts receivable management
purchase of accounts receivable
customer information service
The essence of the factoring agreement is the simple use of services, and therefore works effectively in almost all areas.
Credit and factoring
Credit and factoring are fundamentally different financial transactions. A loan is granted for a certain period, after which it must be returned with interest. Factoring buys receivables, so the money is not subject to return.
Advantages in factoring
It is cheaper than a loan, and the workflow is simpler due to the active introduction of digital technologies. Therefore, the demand for these services is high, as is the number of factoring companies.
Who needs factoring?
Factoring services
Companies
Factoring services are primarily needed by companies that are at the beginning of the market in their industry. Without sufficient capital, newcomers in business will not be able to promote sales, as they will be forced to wait for payment.
By taking advantage of factoring services, companies will be able to direct the funds received to fulfill new orders and receive more profits.
Factoring services
To suppliers
Cooperation with factoring companies in some cases is also interesting for suppliers who have a stable successful business.
Factoring for them can become another direction for financing current work or insurance against non-repayment of receivables.
How to choose a partner?
To use factoring, the management of enterprises should choose a reliable factor.
This activity is performed by commercial banks and factoring companies.