Make full use of liquidity with factoring!
Factoring describes the sale of receivables from goods sales or services to third parties. If your company has completed an order and delivered goods or a service, the invoice will subsequently be sent to the customer. Your customer must then settle the invoice within the agreed payment term. This is where factoring comes into play: You send a copy of this invoice to the factoring service provider. Within 24 hours, you will receive your receivables directly from the factoring service provider.
How does factoring work?
With factoring, you receive the full amount minus the factoring fee within 24 hours. Factoring thus provides quicker access to your funds, allowing you, for example, to pay your suppliers with discounts or to make investments for your growth. The credit assessment by the factoring service provider typically takes up to 48 hours and does not require any securities. After approval, turn your invoices into liquidity in the shortest possible time.
What are the advantages and disadvantages of factoring?
- Liquidity gain: Companies can secure immediate liquidity with factoring, independent of their customers' willingness to pay or payment terms. You receive your money within mostly 24 hours, which not only improves your liquidity but also makes you financially more flexible.
- Better rating: Factoring improves your equity ratio independently of banks, which in turn enhances the rating, creditworthiness, and creditworthiness of your company.
- Competitiveness: Continuous liquidity and the improved equity ratio allow you more room for business decisions and future investments. Longer payment terms for your customers additionally improve competitiveness.
- Less risk: Factoring can offer you a 100% protection against loss of receivables, so you do not have to worry about whether a customer actually pays their invoice on time.
- Costs: The service from factoring service providers offers many advantages for companies and thus comes at a price. The costs are dependent on the estimated risk, service, and labour involved, as well as being revenue-related. Each company must determine the cost-benefit ratio individually.
Who is factoring suitable for?
The benefits of factoring are clear. Should you also resort to this service for your company? Factoring is particularly interesting for companies in the sectors of trade, mechanical engineering, healthcare, chemistry, and IT, but also for all other companies that meet one or more of the following points:
- The company is in the growth or expansion phase and needs to make investments to continue growing.
- The competitive environment of the company is highly competitive. Long payment terms offer an opportunity for attractive positioning.
- Rising prices for raw materials and goods lead to purchasing difficulties.
- The payment morale of the company's customers is low.
- The company's balance sheet is largely dependent on receivables and stock levels.
Towards more liquidity with Tidely and abcfinance
Thanks to Tidely, your liquidity is no longer a black box. On the dashboard, you can see at a glance how your liquidity stands and what open receivables and liabilities are upcoming. Facing a liquidity shortage or need more money for new investments? Then the factoring service from abcfinance might just be right for you. Behind the Factoring-Button, you can immediately switch to abcfinance and utilise the factoring service. Optimise your liquidity with Tidely and abcfinance!
Learn more about Tidely and abcfinance now!
