Business

The factoring companies manage your accounts receivable with the same professionalism and involvement that you would expect from your own team. Their factoring services also include financing, specialized risk assessment for your entire receivables portfolio and credit control of debt recovery from buyers.Let’s have a look at the factoring process and factoring invoices.

After signing the purchase waybill by the buyer, you send them a scan-copy of the waybill, on the same day we prepare you a register of assigned cash claims for a signature for the signature, we send it to you, you sign it with an electronic signature or if you do not, print it out and sign it. After receipt of a signed copy of the electronic signature or the original of the register and invoices, we ensure payment up to 95% of the monetary claim on the waybill or the certificate until the end of the business day. Normally, this process takes one payment day. After they receive the repayment from your buyer, we will withhold the financing amount and the factoring commission and send you a residual payment no later than the next day.

  • Full complex of factoring services
  • Classical factoring service includes the following components:
  • Assessment of the risk of non-payment of debtors transferred to factoring services
  • Financing receivables in accordance with the limits set by your debtors
  • Administration of accounts receivable in accordance with the accepted rules of communication between your company and your customer

Support for collection of possible problem receivables

Receiving a full set of factoring services, your company is filled with additional liquidity to increase turnover. The risk of default on the part of debtors is significantly reduced – a highly professional team of our risk managers assesses your potential debtors for long-term solvency and, in the process of your work with them, monitors it. Costs for accounting and economic security are significantly reduced by redistributing this burden to a factoring company, and you can concentrate your time and material resources on solving key tasks of your business.

Factoring without receivables management

You can choose the option of obtaining financing for the assignment of rights of monetary claims to your customers, while the management of receivables is carried out by employees of your company. This factoring service includes

  • Assessment of the risk of non-payment of debtors transferred to factoring services
  • Financing receivables in accordance with the limits set by your debtors

Selective factoring

Factoring can be used as an instrument for smoothing the dynamics of cash flow of your business – you can transfer only selective monetary claims within the same supply contract. Such a need arises when several factors coincide, leading to an unplanned drop in the liquidity reserve below an acceptable level. An alternative to this service is the retention of reserve funds on the current account, which can be costly and inconvenient.

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.

Most often, two types of factoring are used: with regression and without recourse. The difference is who takes the risks in case the customer does not pay for the supply, a factor or you.

Factoring with recourse

Factoring with regression is usually cheaper than without it, and getting it for the first time is easier.When factoring with recourse, accounts receivable are retained on your balance sheet. The first payment factor does not transfer you all the money, but only a part.If the buyer does not pay on time, the factor makes a reverse assignment, that is, turns your factoring into a loan – requires that you return the first payment and pay a commission for using the money and working with the documents. The support from the factoring company is immense.

Factoring without recourse

This service is similar to the insurance policy, under which you already received a refund.

The factor buys your receivables on your balance sheet. The first payment factor can pay you the full amount.

If the supply is not paid, the factor remains one-on-one with your customer-buyer, you do not have to return the money to the factor.

What should you remember if you want to sign a factoring agreement?

Factoring is not the “financing of the last hope.” Factors do not work with those who need money yesterday. The best situation for a factor is when they are approached to him one or two months before the start of sales.

The factor takes care of communicating with your customers on a sensitive issue – timely payment. If your customers are strongly against such communication, most likely, the contract of factoring will not be concluded.

Carefully read the terms of the factoring agreement and all the annexes to it. If, in addition to money, the factor promises to provide you with services with complex names, ask what exactly and on what terms it offers you. Ask the factor to calculate the cost of factoring using an example from your practice. With these kinds of supports the development of the company happens to be easier than ever.

 

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