The Growth of the Business Now In the Hands of the Experts

You run a booming business that has significant cash requirements, but the bank has turned down your funding application? Factoring is an effective way to find the funds you need for growth.

Having become very popular in the business world, factoring is not new. Historically, businesses with cash flow problems used it; today, it becomes a real driver of growth for entrepreneurs when traditional financing tools no longer follow. The Net 30 invoice is used there.

The operation was thus defined in 1973 in its information note n ° 21 of October:

The factoring transaction consists of a transfer of trade receivables from their holder to a factor responsible for collecting the receivables and guaranteeing their proper completion, even in the event of temporary or permanent default by the debtor. The factor may prepay all or part of the amount of the transferred claims.

In more accessible terms, factoring is for a company to delegate the management of its receivables to a specialized institution called “factor”.

It assigns all or part of its unmatured receivables and the provider advances the corresponding funds in return before proceeding with the recovery. The factor assumes the risk in case of temporary or definitive inability of the final customer.

The services of a factor are multiple:

  • keeping accounts
  • recovery of debtors and litigation
  • identification and registration of payments
  • lettering of payments and their banking
  • amicable recovery
  • litigation

This flexible financing solution replaces or complements a traditional bank loan and can be used in all phases of the company’s development, adapting to changing needs.

Your company is growing? Do you have a need for cash?

There are many solutions to deal with new expenses that your company can generate. Meilleurtaux helps you and directs you to the lender most suited to your requirements.

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Practically, how does factoring work?

Once the contract with the factor is signed, here are the different stages of your collaboration.When you receive an order from a new customer, you must create a buyer account with the factor. As at the time of the establishment of the factoring contract, you must communicate the business name of each client company, its exact coordinates, its number and especially the estimated turnover or the amount of the estimate.

The factor assesses the risk of unpaid, and decides whether or not to grant you a guarantee line for future business transactions with that customer. In case of rejection, you have the choice between assuming only the risk, or decline the order.

Depending on the terms of the contract, you or the factoring company will have to inform the customer that it must make its payments to the factor (except in the case of confidential factoring). Each invoice must include a mention of subrogation provided by the factor.

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