Ce este factoringul

What is and how can factoring be accessed?

Even if you’re an entrepreneur or only involved in managing an SME, you probably know how important it is for your business to access modern and flexible financing tools. Their role is to facilitate the coverage of monthly payments to employees, suppliers, or the government, helping you to overcome typical operational challenges and create a context for the development of your company. 

If you are looking for solutions to finance working capital, you have probably heard of factoring. Although its popularity is growing, given its advantages in the current economic context, where traditional lending is becoming less advantageous and accessible, factoring remains a relatively unknown and underutilized tool by most SMEs. 

Therefore, in the following, we will define the term factoring, present some examples of how it can be used in the activity of your SME and provide you with details on the best practices you can implement in your company to successfully access it.

What factoring is?

Factoring is an operation where a company’s receivables can be converted into money. Receivables that can be monetized through factoring are usually the amounts due on invoices issued to customers for goods and services sold. 

From a legal point of view, factoring consists of a commercial credit contract in which a specialized entity in financing invoices with payment terms, called a factor, and a commercial company interested in securing working capital, called an adherent, participate. The factor is usually a bank or an NBFI, and the adherent can be any commercial company that issues invoices with payment terms.

What type of factoring can you access?

The most well-known type of factoring is its classification from the perspective of the debtor’s default risk. Based on this criterion, factoring can be: 

  • Factoring with recourse – the risk of debtor default is borne by the adherent; 
  • Factoring without recourse – the risk of debtor default is transferred to the factor.

Is it advantageous to use factoring? 

It can be advantageous to use factoring if, most of the time, invoices issued to your clients have high payment terms, usually between 30 and 120 days. In this way, you can use the resources generated internally by your business, easily converting them into liquidity. Financing is adapted in this way to the volume of sales of your company. 

Who can access factoring? 

Any company that issues invoices to clients with payment terms can use this financing tool. It is however necessary and effective especially in the case of SMEs that want to finance their working capital at an advantageous cost to cover the invoices issued by suppliers, but also other operational costs or unforeseen expenses. 

Why use factoring? 

The current economic context is defined by pronounced macroeconomic instability, felt by the majority of growing SMEs in the increase of interest rates. Thus, traditional loans – whether we are talking about short-term loans or credit lines – are becoming increasingly expensive, increasing interest expenses and hindering the financial planning of borrowers due to the lack of predictability of their evolution. 

Furthermore, credit institutions are modifying their risk management policies to respond to the volatility of financial markets and the increase in non-performing loans. For SMEs, this translates into a more frequent request for guarantees in accessing loans, which hinders SMEs’ access to financing. In these conditions, factoring constitutes a more accessible and less expensive alternative for working capital applicants compared to traditional loans. 

Where can you find factoring offers suitable for your SME?

Până nu demult, factoringul se regăsea doar în ofertele individuale comerciale ale băncilor și IFN-urilor din România, ca produs de creditare în sistemul de finanțare tradițional. Astăzi, finanțarea alternativă oferă o soluție inovativă și modernă pentru IMM-ul tău.

În prezent, poți accesa factoringul mult mai simplu și rapid, fără a mai fi nevoie să faci drumuri către agențiile bancare și fără birocrația specifică produselor tradiționale de creditare, folosind un marketplace online, cum este cel pe care ți-l punem la dispoziție. 

How does factoring work as an alternative form of financing? 

The mechanism by which you can access factoring through the marketplace is that of auction, going through the following steps: 

Step 1: You can start the process by registering your SME by creating an account, which takes, on average, only 15 minutes. 

Step 2: After the profile approval within 24 hours, you need to upload the invoices for which you want financing. 

Step 3: The auction takes place, in which banks, NBFIs or private investors registered on the platform offer the uploaded invoices, and you can choose the offer that best fits the needs of your SME. 

Step 4: Obtaining financing, which usually takes only 24 hours from approval, due to the technology embedded in the platform, which makes the entire process of analysis and approval relatively quick. 

Good practices – suggestions for successfully accessing financing through factoring 

To increase the chances of your request being approved, choose invoices issued to customers with a good financial history and with liquidity indicators above average. For example, if you have customers with whom you have collaborated in the past and there have been no payment incidents, this can be a good indication that you can invest in their loyalty, offering more generous payment terms and using factoring for the financing of the working capital necessary for your SME. 

Do you want to learn more about factoring? 

If we haven’t answered all your questions yet, follow our blog, where you can find everything you need to know to use this financial instrument in your SME’s activity without challenges!

Leave a Reply

Your email address will not be published. Required fields are marked *