Who is factoring suitable for?

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Where to get money for business and how to manage finances? Experts from the educational platform for entrepreneurs "Kurs" will tell you .
Thus, the company avoids cash flow gaps with the help of factoring. At the same time, factoring has another advantage - in the financial statements of the entrepreneur, such financing does not appear as a financial burden. Having received it, the enterprise transfers further settlements with the customer to the factor. When the factor accepts payment from the customer, the enterprise's debt to him is automatically extinguished.

The benefit of a factoring company is that the entrepreneur pays a commission for the period of use of the money received from the factors. They receive this financial reward in the form of a percentage of the advanced amount of the debt.



Types of factoring
There are two main types of factoring - with new zealand whatsapp phone number recourse and without recourse. In the first case, the factor immediately pays the supplier the entire amount of the receivables. But the responsibility for the money lies with the supplier. If the buyer does not pay the invoice on time, the seller will have to pay the factoring company himself.

In non-recourse factoring, the supplier receives a payment of up to 95% of the delivery amount from the factor, and then the buyer transfers the entire amount to the factoring company's account. The factoring company is fully responsible for the money.



Factoring is suitable for small businesses that operate on deferred payment terms for delivered goods. The company can not only avoid cash flow gaps, but also use factoring as a growth tool - as a measured and timely "injection" of funds into working capital.

In my opinion, this method of financing is ideal for small manufacturers working with retail (which always pays on a deferred basis), sellers on marketplaces and service providers.