- Quickly available. Applying for a loan from your bank, often takes months. This is because of the many procedures and strict guidelines of general banks. For loans up to €1 million, the bank often does not give you any credit at all. In addition, as an entrepreneur, you have to hand over a large amount of information. With specialised factoring companies, this all goes much faster. The time between the first contact and the availability of the requested credit is often no more than a few weeks. And if it is really necessary, even shorter. In addition, factor companies request much less information. It involves debtor and creditor lists and the latest annual report. Much more is not needed.
- Flexible. A loan from a factoring company follows the credit needs of the company. If the order book increases - and with it the accounts receivable position - then the financing also increases automatically. If activity declines in the off-season, then the factoring credit also declines, and with it the costs. As a result, you never pay more than necessary. Although factoring companies do apply a maximum credit ceiling per client, in the case of a growing company, this can be increased without much effort and within a few days, without having to hand over large amounts of business information.
- Outsourcing debtor management. It is possible, and in some cases even mandatory, to transfer debtor management to the factoring company. They do so professionally and on behalf of the company. In case of disputes, consultation with the company follows. In many cases, factoring is combined with credit insurance, so the risk of non-payment is also off the books. This way, tedious work is outsourced, there is more time for more important matters and you as an entrepreneur can sleep peacefully.
- Flexible payment arrangements with customers. Because the factoring company advances up to 95% of the invoice amount including VAT on day 1 and does so up to 120 days after invoice date, the entrepreneur can agree longer payment arrangements with its customers without running into liquidity problems. This is a commercial advantage.
- Payment discounts from suppliers. When a company starts factoring, additional liquidity becomes available (up to 95% of the accounts receivable portfolio). These freed-up funds can be used to negotiate payment discounts from suppliers. This is sometimes as much as 4% of the invoice amount. In this way, factoring does not cost money, it actually makes money!
