- Are the buyers companies? Claims against individuals do not qualify.
- Do the invoices relate to completed services?
- Is there a reasonable spread in the accounts receivable portfolio?
- Is the creditworthiness of the buyers sufficient?
If most of these questions can be answered with a 'yes', collecting the necessary information begin. Then at least think about:
- Recent financial statements
- Interim figures and possibly a liquidity budget
- Debtor and creditor lists
- Sample invoice
We will analyse the documents and prepare a summary information memorandum (IM). This contains information about the company, its activities and the market it operates in. We also describe the financing needs and analyse the debtor portfolio (and possibly the stock position). With this IM, we approach up to three financiers and ask them to make an offer. At this point, we are about two weeks away. At least: if all the information was delivered on time and in full, of course. The financiers generally need another week to make an offer.
And then?
We will compare offers based on terms and conditions. These include interest rates, additional costs, the amount of financing and the collateral requested. Often, we negotiate these matters and the financiers submit an adjusted offer. Of course, as an entrepreneur, you ultimately choose the offer that fits best. After signing the final offer, the formal approval process begins. This takes about two to four weeks. With larger credit applications, there is often an additional audit by the financier, which looks more closely at the debtor portfolio and related business processes.
Agree?
Once this is all agreed, the formal agreements are drawn up. After signing, the start-up of the cooperation begins. This takes 2 to 6 weeks, depending on the complexity of the agreement. Then the first financing is made available, often with the existing financier being the first to be repaid, after which factor financing is available on a daily basis. All in all, the process from first meeting to making the financing available takes seven to 13 weeks. Faster is also possible, but slower is usually not desirable.
Still have questions? Feel free to ask our specialists!
