Who is factoring for?

Service Business

Both start-ups and those with many years of experience in the market can use the factoring service. It is one of the modern forms of financing the company's day-to-day operations. It helps companies to improve their financial liquidity, while helping them to collect debts from their debtors. However, it is worth considering what factoring really is and for what type of company it is the best solution. It is becoming more and more popular to choose this form of financing instead of taking out a loan.

What is factoring?

Factoring is a specific form of financing the company's day-to-day operations, which consists in the direct purchase by financial companies or banks that specialize in factoring services of customers' receivables - factoring agents, due to them from sales with deferred payment terms to recipients - debtors.

Factoring - for whom?

Factoring is a very good solution for companies whose main source of income is the sale of goods and services with deferred payment terms. It is also an ideal proposition for enterprises looking for trade credit financing for recipients and for those companies that strive to improve the structure of their balance sheet. Experience in the market is not of key importance here, because what matters most is the need to obtain funds to finance current development. In this way, the factor can settle his obligations ahead of schedule, and at the same time receive various types of rebates or discounts from his suppliers.

Advantages of factoring

The key to accessing the factoring service is also having reliable contractors. They are of paramount importance to creditworthiness. This means that entrepreneurs can obtain financing for current trading even when, in the opinion of the bank, they do not have satisfactory creditworthiness. A significant advantage of using factoring is also reducing the risk of insolvency of contractors - this issue applies to domestic and foreign partners. Factoring also allows you to discipline recipients who do not pay their liabilities on time. At the same time, it reduces the time necessary for the administration of receivables - this is particularly important in the case of a large number of settlements.

What documents are important for factoring?

Before we sign a factoring agreement, we need to prepare some important documents for the factor. Below is a list of the inseparable documents needed to conclude a factoring agreement.

1. Registration

  • registration documents - entry in the Central Register and Information on Economic Activity (CEIDG) / excerpt from the National Court Register, decision to grant NIP and REGON, articles of association

2. Finance and accounting

  • Financial Statements
  • ZUS and US certificate
  • settlements with suppliers and recipients
  • copies of loan agreements / bank reviews

3. Commercial

  • templates of invoices and corrective invoices
  • copies of factoring contracts with customers

4. Additional documents

  • list of recipients for factoring
  • application for factoring (form to be completed)
  • application for limits (form to be completed)