Tired of waiting even longer for the money from unpaid, sent invoices? Then factoring is the solution for you. This alternative method of financing for entrepreneurs ensures that you are no longer dependent on the applicable payment term. Even better: with factoring from Factris, you have access to the amount in question within 24 hours. Ideal! But how does factoring actually work? In this blog we explain it step by step.
Factoring: how does it work?
As an entrepreneur, have you supplied products and/or services and sent an invoice for these? Then, in most cases, the buying party has 30 days to pay this invoice. However, while waiting for this payment, you as an entrepreneur continue to have to deal with the necessary fixed costs, investments and other business expenses. Because the payment of the invoice often takes a long time, this can lead to a cash flow problem. In that case, factoring offers the solution. Factoring actually works very simply: you sell your invoice to Factris, after which we transfer the amount owed by the customer to you within 24 hours. Because Factris becomes the owner of the invoice with this purchase, we take care of the further processing of the payment from the buying party. So with factoring, as a business owner, you no longer have to take into account the 30-day payment term, thus avoiding potential cash flow problems.
How does factoring at Factris work?
When you choose factoring at Factris and want us to buy a specific invoice, you place our assignment text on the invoice. When sending the invoice to the debtor, you put Factris in the CC of the mail, so we can see that the invoice has been sent to the debtor in question. Once the sending is complete, it’s time for the next step: uploading the invoice in our online environment. Once the invoice reaches us via this route, we will pay the amount (minus a small fee) to you within 24 hours.
How does factoring work in four steps
The factoring process at Factris consists of four steps: you become a customer, you send the invoice to our online environment, we take care of the payment within 24 hours and the further settlement with the customer. To briefly explain how factoring at Factris works, we will take you through these four steps.
Step 1: become a Factris customer
Do you opt for factoring at Factris? Then sign up to get your invoices funded within 24 hours. By signing up with us, you will receive a customised factoring offer for your business. Our financial experts at Factris will assess your needs and respond as quickly as possible.
To become a Factris customer, you need to meet a number of conditions. You are eligible for factoring:
- If your company has been in existence for at least 6 months
- If you have a minimum annual turnover of EUR 50,000
- If your debtors are based in the OECD countries.
Step 2: sending the invoice
After you have registered with us as an entrepreneur, it is time for the next step: drawing up and sending the invoice. By adding our assignment text to the invoice when you prepare it, the debtor will know that the invoice in question has been assigned to Factris. You can then upload the invoice in our online environment. This way, you can be sure that the invoice will reach us quickly, easily and securely.
Step 3: payment within 24 hours
As soon as you have uploaded the invoice in our online environment, we will proceed to payment. This payment takes place on the same working day as the working day of purchase. Here, we deduct the cost of our factoring directly from the amount to be paid out. These costs are based on volume and risk, and range from 0.5% to 2.5% of the total value of the invoice.
Step 4: collecting the amount from the customer
Step 4 of the factoring process actually only applies to Factris. Factris takes the entire handling with the paying customer off your hands. So we take care of collecting the amount the customer still has to pay. Does the customer not pay us? Then we will first contact you to find out where the problem lies. Some entrepreneurs find it important to maintain the customer relationship and want to contact the customer themselves. Accounts receivable management is customised and is set up in consultation with you.