Discover the Right Deals for the Company Now

Factoring represents a financial service system focused primarily on solving the working capital needs of the company, recovering its accounts receivable in advance, receiving the following advantages:

Financial

  • Liquidity

It offers a safe, reliable and continuous source of resources.

  • Financial situation

It allows the company to grow, using its own resources, causing a healthier financial situation in the company by improving asset turnover.

  • Flow leveler

When there are seasonal sales, extraordinary or occasional expenses, as well as take advantage of existing opportunities with suppliers.

  • Reciprocity

It does not require deposits or investments for reciprocity. It does not immobilize assets.

  • Monetary position

It promotes the best use of monetary assets, without generating liabilities or indebtedness, and there may be some fiscal benefit.

  • Revolvency

A factoring line is totally revolving, so it allows the company to obtain resources at any time.

  • Increase the ability to negotiate with suppliers.

Administrative

  • Credit and collections

The non-productive tasks of credit, administration and collection management to the factoring professionals, minimizes costs and avoids loss of time.

  • Eliminates controls

The factoring keeps the company informed about its customers and particular collection situations.

  • Opening new markets

Due to the close relationship that exists with the main buyers, the possibility of recommending new markets arises.

  • Productivity

Efficient the operating cycle of the company, since it does not require waiting until the collection date for a new purchase of raw materials.For the factoring invoices this is important.

  • Improves the relationship between customers. It benefits your image by delegating collections to professionals with large commercial relationships.

Disadvantages

  • High cost, specifically the interest rate applied is higher than the conventional commercial discount.
  • The factor may not accept some documents from your client or request for the operation the option with recourse.
  • Operations related to perishable and long-term products are excluded.
  • The client is subject to the criterion of the factor society to evaluate the risk of the different buyers.

Obligations of the factor company and the company

The factor company can reject operations that do not offer normal market guarantees. Regarding the other operations, its obligations are:

  • Collect debts.
  • Respect the expiration dates of the invoices to proceed with the collection.
  • Assume the risk of insolvency (depending on the case)

The obligations of the company are:

  • Give all the credits that originate their sales.
  • Notify your client of the signing of the contract with the factor company.
  • Facilitate the company factor report on: Sales, financial situation, accounting. Also the payments received directly from the clientele, obliging to transfer the funds thus obtained.
  • Giving back to the factor society the services rendered.
  • Do not intervene in collection management unless the factor company requests it.
  • Respond to the breach of the contracted obligations with its customers.

Comments are closed.