business factoring

The main purpose of business factoring - to provide the customer the opportunity to engage in core activities

Small business is interested in funding since its sources are limited. He needs a truncated factoring, representing loans secured by accounts receivable. The average business is interested in the tool increase sales, but because he needed a full business factoring
business factoring - it accounts receivable financing requirements, a range of services aimed at the rapid growth of the company. business factoring allows for short term increase sales several times and enables the company to develop more effective than when lending. The main objective of the bank factoring services - to provide the customer the opportunity to engage in basic activities - sales, without being distracted by the constant financial issues.



The effect of the business factoring service is maximal if received funding directed to the purchase of goods, which in turn is also shipped with a deferred payment, the company again receives funding, etc. "This work allows businesses to actively grow and brings a significant competitive advantage. Work with bank customers, too, as a rule, leads to a reduction in the payment terms of supply buyers. Due to business factoring minimizes the project risk associated with active growth of the company, "- explains Vasily Belov, CEO of mortgage broker" Fosborn Home. "He notes a number of advantages of factoring for suppliers and buyers.

for supplier

- Simple process of obtaining funds.

- Minimum package of documents.

- Does not require collateral and guarantees.

- Improved financial performance.

- Competitive financing rates and terms.

- Ability to offer customers more flexible payment terms of goods.

  for the buyer

- Attracting new customers.

- Additional motivation and support the work of key suppliers without additional risks and costs on the part of the buyer.

"The advantage of factoring to credit depends not so much on the size of the company, but on the possibility of expanding business. Credit allows a business to support at that level and gradually raise him. But for active growth - several times - the loan is not enough, this requires factoring, - said Vladimir Emelyanov, Head of business factoring "MDM-Bank". Factoring allows a greater volume to replenish working capital; save at work with debtors, as it makes the bank; turn fixed costs into variable lending clearly link them to implement and pay for the goods, the expert continues.

According to Vladimir Kolodyazhni, Head of business factoringNOMOS-BANK "A key advantage of factoring is that this financial instrument - unsecured and more operational in terms of decision-making. First of all, it is aimed at meeting the needs of small and medium-sized businesses. "

The loan amount is always limited by the size of the collateral, and the market value of the collateral may be twice the size of the loan, and the size of factoring financing usually depends on the capabilities of the marketing, the expert continues. Unlike credit, factoring does not exclude the simultaneous use of traditional financial instruments. business factoring usually does not depend on the size of the received credit. In addition, the use of factoring improves the financial statements.

business factoring helps the supplier to significantly strengthen its position in the competitive environment, namely to offer its customers for goods shipped or services rendered longer grace that the current situation is a significant competitive advantage.

It should be noted that factoring - it is not only funding, but also a set of related services: insurance risks associated with delayed payment of goods or services; collection of accounts receivable; information services; consulting documents, as well as providing credit management function for setting limits, monitoring and collection of receivables.

Thus, providers have an opportunity to pass on a huge piece of work with customers (debtors) on the factors and switch to the decisions of other more important tasks aimed at business development.

The main differences from the business factoring loan

credit

- The loan is usually granted bail.

- Loan repaid to the bank by the borrower.

- Credit is given for a fixed term.

- The loan is payable in the contracted day.

- Credit is given for an agreed amount.

- To obtain a loan need to register / provide a large number of documents.

- When bank lending to the borrower does not have any additional services

factoring

- For factoring financing does not require collateral.

- business factoring financing is repaid from funds paid by the debtor.

- business factoring financing is paid for a period of actual payment deferral.

- business factoring financing is paid on the day of delivery.

- The amount of financing is not limited and can be increased in proportion to the increase in sales.

- business factoring financing is paid upon presentation of invoice and bill of lading.

- business factoring financing is accompanied by accounts receivable management.

If you mark the complexity of factoring, the bulk of which is that many companies badly organized workflow, so the company faced with the problem of organizing the workflow process, when factoring services. "Sometimes suppliers are faced with the reluctance of some debtors to work on factoring. Often it is difficult to calculate their vendor costs due to the presence of hidden fees. But significant benefits accruing to suppliers using factoring services, outweigh, so factoring enjoys very high popularity, "- said Vladimir Kolodyazhni.

The demand for factoring services in the SME segment is growing, says Vasily Belov. SME companies for various reasons are unable to attract borrowed funds sufficient for the growth of its business volume as well as credit score is based on the past experience of the client companies. Many companies, who can not get a standard loan products may rely on factoring financing, as factors to assess not only the current financial condition of the client, but also the quality of the receivables. Often medium-sized company supplies on the market known debtors, which significantly reduces the risk factors and promotes the adoption of a positive decision on cooperation, "- continues to expert.

In summary, there are several difficulties in factoring. Many clients SME segment are not financially stable enough for taking risks on them. Companies do not reflect the true state of the business in the official financial statements. Most companies do not have well-established scheme document, which complicates the process of starting and current work with clients on factoring.