Factoring is a kind of sales-congruent company financing. It gives you quick liquidity, a balance sheet contraction, and therefore better balance sheet indicators. The factoring company/factor (it does not need to be a factoring bank) purchases your receivables and credits you the invoice amount immediately.
In general, about 10% of the receivables are retained for settlement reasons (bonuses, discounts, advertising rebates of the debtors) until the debtor has paid.
Factoring can also insure the loss of your receivables in place of merchandise credit insurance. Often, so-called full-service factoring also takes on the responsibilities of debtor management.
Factoring has many benefits:
- Relieves short-term credit lines at banks, better possibilities for medium and long-term financing
- Achieves additional discount revenue
- Sales-congruent financing
- Preserves classic credit securities
- Helps grant payment terms for clients
- 100% cover against bad debts
- Optional handling of debtor management
- Implementation of dunning and collection work
- Possibility to combine with purchasing, import, and reverse factoring options
In total, there are more than 100 established factoring institutes in Germany, including:
- Factoring companies with a banking background as partner
- Factoring companies with insurance or holding companies as partners
- Factoring companies with strong private investors as partners
Some of which can be considered niche providers or are limited to small sales figures, others work exclusively in import and export, other represent the entire spectrum of factoring solutions but are less flexible and customized.
Which factoring company and what factoring procedure would you consider?
HANSEKONTOR selects a suitable factoring partner based on your specific needs and wishes. We take the competence of its employees, legally founded contract administration, refinancing structures, reinsurance possibilities, technical performance, as well as capability and qualifications into account to support you constantly in everyday business.
To find the perfect factoring procedure, we analyze your receivables structure and current debtor management in detail. We compare different factoring offers and select the most favorable offer for you. After completing a factoring contract, we support you, especially in the start phase, in the implementation of the factoring system, for instance by training employees, EDP set-up, etc.
Good to know
Factoring is a purchase, not a credit transaction. It describes the ongoing purchase of short-term, future receivables from product deliveries and services as well as their administration and debtor accounting, dunning, and collection work.