11/16/2023 0 Comments Factoring invoices advancements![]() The factor is an important working capital actor, generally granting short term flexible financing that follows the sales volumes of its clients (that way preventing unpleasant surprises when pay-back of the credit facility is due). The factoring and commercial finance industry offers a wide range of products and services, which are extensively used by all kinds of companies. In most cases, that is what impacts the seller’s DSO positively. However, depending on the disclosing of the factoring relationship and the local legislation, the buyer may be obliged to pay the factoring company. The debtor or buyer is an involved party. Typically, companies relying on factoring are providers of goods and services, quickly expanding companies, companies looking to improve their balance sheet structure, companies looking to rationalise their credit management and administration of accounts receivable, and companies looking to regulate their cash flows. By limiting the concentration risk, it will make sure that in the event of an individual debtor failing, the loss damage impacts the security of either party less severely. Unlike bank credit facilities, a factor will limit its financing risks by spreading its outstanding debts over a reasonable number of debtors. Allowing management to focus on core business activities.Controlled cash flows, allowing better cash forecasting.Strengthening of commercial relations with the buyers.Granting a self-liquidating credit facility.Possibility to gain increased discounts from sellers by paying them earlier.Flexible financing (level of financing remains in line with sales volumes).Efficiency in sourcing new customers using up-to-date credit information and experience.Transferring fixed costs into variable costs. ![]()
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