Factoring is the ongoing purchase of short-term receivables from goods deliveries and services! Alliance one factoring is the alternative form of financing to bank-standard financing.

Factoring is plannable liquidity!

Alliance one factoring provides companies with high liquidity. We support you when your assets are already in use and additional credits are extremely difficult to obtain.

Factoring is security against bad debts!

Factoring safeguards claims against losses. We take over short-term sales financing by immediately paying current and valuable receivables from new invoices to end customers.

Factoring is growth!

Factoring relieves companies of administrative tasks, so that you can concentrate on your causal competencies in your area of ​​expertise, because they are priceless. We not only take on claims, but also complete the entire dunning process up to the debt collection dunning procedure and inform you at any time about the progress of your receivables portfolios.

What are the types of factoring?

Among all factoring products, the following groups or types can be distinguished:

  1. Classic factoring with regress.

The factoring company buys out about 90% of the debt, and after the expiration of the grace period, it has the right to demand from the seller the funds previously issued. Thus, the factoring company practically does not take risks.

  1. Factoring without recourse

A factoring company independently requires money from the buyer in case of delay.

Another factoring is divided into:

  1. Factoring without financing

When a customer who has sold an invoice to a factoring company receives the amount of the invoice on the due date of payment it called factoring without financing.

  1. Factoring with financing

In this case the client can demand immediate payment of the invoice, regardless of the due date for payment.

The debtor may be informed in advance of the transfer of debt to the factoring company (in which case factoring is considered “open”), which is noted in the invoice. If the participation in the transaction of an intermediary company is not covered in the contract, then this factoring is considered “closed”.

In terms of factoring services is also divided into:

  • Sales factoring – sale of receivables, and
  • Purchase factoring – financing suppliers in the amount of receivables.

Factoring can also be both domestic and international, which involves the participation of parties from different countries.

How much does factoring cost?

The cost of factoring services consists of the commission charged by the intermediary for the service (usually expressed in% of the amount of the invoice) and the interest charged on the early payment of the amount of debt.

The average levels of commissions are in the range of 1.5-3.0%. To translate this cost in% per annum (and compare it with a normal loan), you should multiply the commission amount by the turnover ratio of the receivable. For example, if the turnaround period is 30 days, then the turnover ratio is 360/30 = 12. If the factoring fee is 1.5% of the DM amount, in annual terms the factoring cost will be 1.5% * 12 = 18 % per annum. Obviously, the cost of factoring in this case is comparable (or even 1-2% higher) to the loan rate in the bank for a borrower with a good credit rating.

Comments are closed.

  • Partner links