Factoring company - which one to choose to obtain fast and safe financing

Service Business

Factoring is an increasingly popular solution, especially by small and medium-sized companies. The main advantage of this service is the express obtaining of business financing, which allows you to maintain the financial liquidity of the company. Choosing the right factoring company is very important.

Factoring is a great solution for small and medium-sized enterprises

Small and medium-sized enterprises, especially sole proprietorships, are often exposed to problems with financial liquidity. Just one unpaid invoice may cause difficulties related to, for example, paying employees' salaries or purchasing the materials needed to complete the order. The result of the loss of financial liquidity is, ultimately, even bankruptcy. That is why more and more companies decide to use factoring, i.e. a solution that allows them to obtain quick financing for the company.

How does factoring of receivables work in practice?

The entrepreneur (factorer) provides the factor, i.e. the company providing the financing, with non-overdue invoices with a deferred payment date. The factoring company transfers the funds from the invoice to the entrepreneur's account even in a few minutes from the invoice submission for financing, thanks to which the company's financial liquidity is secured. Factoring is an irreplaceable tool in industries such as: construction, transport, services, trade, production, gastronomy and freelance.

What to consider when choosing a factoring company?

There are many factors to consider when choosing a factoring company. First, however, the entrepreneur should precisely define his needs and expectations. On this basis, you can start looking for the right company. It is worth following the following criteria:

  • type of financing provided by the factor - e.g. silent, explicit, advance factoring etc .;
  • financing speed and commission rates for financing;
  • maximum factoring limit;
  • transparent costs and contract, no hidden fees;
  • a free grace period for repayment after the invoice maturity date;
  • factor specialization, experience in a given industry (depending on the specifics of the industry or sector of the economy, customer expectations may differ);
  • the company's reputation on the market, professionalism of experts;
  • security of the financing process;
  • additional services, for example verification of contractors, debt service and debt collection;
  • the way the factoring agreement is structured and what exactly it contains - it is also worth paying attention to the withdrawal procedure, additional costs and interest.

When choosing a factoring company, you should carefully read the offer and contract, as well as talk to a factoring expert who will present all the advantages and disadvantages of this solution.

A good factoring company and expert support are a recipe for the company's liquidity

Invoices issued with long payment terms can cause payment bottlenecks in the enterprise. A long wait for payment, for example 30, 60 or 90 days, may result in an imbalance in the financial liquidity of the company, which must still have working capital to pay the most important payments, such as: Social Insurance Institution, salaries, subcontractors' payments, minor repairs, rent, fuel, advertising activity, etc. An additional disadvantage of waiting for funds is the fact that formally the company shows income and has to pay tax on it, although in reality the entrepreneur is still waiting for the funds. Therefore, factoring is the best recipe for maintaining the company's financial liquidity. It is a safe and fast method of financing - all you need to do is apply for a factoring limit, add an invoice, select the type of factoring and receive a financing decision in seconds. Behind this automatic process, there are always experts with many years of experience and expertise. Factoring is therefore a very safe and quick way to gain access to funds with almost no formalities and a lower cost of obtaining than a loan or a loan. One of the biggest advantages of factoring is a fully on-line solution, no unnecessary paperwork, at the same time with the highest level of safety and fast service. The most important benefits of using this solution include:

  • receipt of funds from the invoice immediately - even in a few minutes;
  • minimal formalities, no procedures - everything can be done online, without leaving your office or home;
  • control over the company's financial liquidity;
  • unwavering, constant access to capital that can be spent on current expenses, but also emergency situations and investments;
  • taking care of good relations with contractors - factoring enables the extension of payment terms on invoices for contractors, which is even required in many industries;
  • complexity of financing - various types of factoring (e.g. silent, open, advance) allow you to choose the type of financing to suit the needs of the enterprise.

Factoring is a fast and safe form of financing the company's operations, which not only provides constant access to cash for current needs, but also gives a real chance to think about the company's further development, growth and investments.

Emanuel Nowak, eFaktoring NFG

External text, partner's article.