Following the Factoring Process for You

What is factoring for companies? Factoring is a solution for short-term financing of receivables. In exchange for invoices to a factoring company, they receive an immediate cash advance within 24 to 48 hours. The factoring company collects and manages the accounts receivable.

  • What is factoring for companies? Factoring is aimed at all types of companies that want to secure and finance their client accounts regardless of their size or sector of activity.
  • If you have any questions about factoring, do not hesitate to leave your details by completing the form at the end of the What’s factor company.

The factoring can be used at each of the company’s development stage. At start-up, factoring to finance the lack of cash or in the development phase to help the growth of business.

The factoring transaction involves an enterprise that uses a financial institution, called the factor, which, under an agreement, purchases the receivables from the latter and is responsible for recovering them from its debtor customers.

Factoring is the convention by which a specialized institution, called the factor (or factoring), which is often in practice a credit institution, agrees to settle the claims that a company holds on its customers, consideration for the transfer of these receivables and remuneration to it, consisting of commissions and agios. The factor thus pays the company early and is responsible for the recovery of the receivables thus transmitted to the debtors, at the risk of having to bear the eventual insolvency of the latter.

  • Thus, factoring offers companies the assurance of fast and secure payment of their customer invoices. In concrete terms, it allows them to delegate the management of the administrative tasks related to invoicing. The company, by selling its receivables to the factor, discharges indeed the problems of monitoring, recovery or recovery.
  • In addition, it is very rare in practice for an invoice to be paid immediately. In general, customers pay their debts at the due date on the invoices (legally no later than 45 days end of month or within 60 days from the date of issue of the invoice). The company therefore has a gap between when it bills and when the customer pays. By selling its invoices to a factoring company, the company can optimize its cash management.

You must inform your clients that you assign your receivables to a third party by the mention of subrogation affixed to the invoice that you send to your client and to the copy intended for the factor.

The factor will advance the amount corresponding to each invoice received, minus the fees and the percentage that it deducts to constitute your guarantee fund.

The factor receives the payment of invoices due directly by your customer and manages any unpaid invoices.

What happens in case of unpaid bills?

If you have purchased insurance – credit, it supports all or part of the unpaid (depending on your contract) and your full guarantee fund if necessary. For example: If credit insurance covers 80% of your unpaid debts, the factor will recover the remaining 20% ​​by staking in your guarantee fund.

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