Factoring can offer many advantages but does not always make sense depending on your company’s situation. But when does factoring make sense? Below, we have described some situations where factoring is a valuable addition.
For improving liquidity and cash flow
Do you want to improve your company’s cash flow because you have high monthly expenses? With factoring, you can significantly improve your company’s liquidity. Accounts from debtors you are waiting for are paid immediately, improving cash flow.
If you can’t get credit from a bank
Are you just not managing to get more credit in your current account at the bank? Then factoring can help. You are more likely to get financing because factoring companies have different terms and conditions. However, you have to meet some requirements to be eligible:
- You are a B2B-business or freelancer that works for corporate clients
- Your company exists for more than half a year
- Your company makes a yearly profit of more than 50.000 euros a year
For less time spent on accounts receivable management
Do you spend (too) much time on debtor management? A factoring company like Factris can take over your debtor management and debtor risk. We buy your invoices and pay them directly to you. We then make sure the invoices are paid by the debtors. Does the debtor not pay the invoice? Then we take over collection costs and any write-offs. So you have no debtor risk and also save time managing debtors.
If you suffer from long payment terms
Do your customers handle long payment terms of 60 or 90 days? This can be detrimental to your business because you have to wait a long time for payments. This makes it harder for you to meet your company’s payment obligations yourself. If you use factoring, invoices are bought up and paid immediately. This way, you don’t have to worry about your own payment obligations. Do you have any questions about factoring, such as the cost of factoring? Feel free to contact us