Great Deals with the Right Factoring Companies

One of the main advantages that have the factoring for SMEs is the transfer of management of collection of invoices. This may they benefit the SMEs to transform their sales in liquid in advance and keep better control over their customers.

Factoring for SMEs, how do I do it?

Anticipating when invoices are collected will help SMEs finance their short-term operations. This can be achieved through a factoring mechanism, a system that until now was used by large companies. Although, used by banks, more and more small companies that integrate these programs to manage collections. From Century Finance you will be having the best deals now.

  • The companies yield their invoices generated by the sales of the company. If the company hires it, it can access other administrative services, such as coverage of the insolvency risk of customers or advance payment. Although, this way of financing does not cover shares that have long-term maturities. Only those invoices that must be paid within a period of less than 18 days from the invoice date are accepted.
  • If we take as an example an SME that is carrying out an expansion strategy and has clients in different countries, assigning the invoices will help you obtain financing in an immediate way to make treasury forecasts and see if there are possible deviations. Factoring should not be confused with the confirmation.

The confirming is an instrument with which the payment is managed , instead of the charges. A financial institution is responsible for paying invoices directly to suppliers and serves as a financing mechanism for suppliers.

Therefore, the main advantage for companies when selecting factoring is that they can transform sales into money, in addition to receiving additional services from banks. This is also useful to better understand the behavior of your clients and determine their solvency.

Characteristics of Factoring

Although, this generates some expenses and pay the interest rate marked by the banks. The bank can also ask for exclusivity from the company and decide which customers to accept and which not, that is, the bank can choose who will be managing the factoring.

Its characteristics can be:

Sector: Among SMEs there is a wide variety of areas where factoring is used, it is the manufacturing industry that uses the most factoring. These companies can take advantage of this financing mechanism, since they are companies dedicated to the transformation of different raw materials for products and finished goods, ready to be consumed or distributed to final consumers. These activities are very useful to meet the conditions that are required. As an example, they do not usually have long expiration periods, which facilitate the operations that are carried out.

Contract: Before closing the agreement with the banking entities, they will analyze the financial situation of the company. In addition, factors such as the activity of the clients and the way in which they carry out the commercialization of the products take importance. It analyzes how it is sold, to whom it is sold, in what term it is sold and under what conditions the sale is made. This information will establish the viability of the contract, and even determine the final cost of this. Then, limits will be set for each of the clients. At the same time, the documentation must be presented with the amounts that must be managed by the payment in physical form or by e-mail.

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