Что такое факторинг? Что такое факторинговые компании? Что такое финансирование дебиторской задолженности?

1 января 2023 г.

13 минут прочитано

Debt factoring sounds like something complicated, but it really isn’t. Most of the time it’s used when a buyer places a larger order, and the vendor/seller needs to deliver the goods before getting paid.

Buyers often have a range of choices when ordering finished products or raw materials for manufacturing. The seller in these cases, to get the deal closed, must offer some kind of financing deal to make sure they get receive the purchase order.

Debt factoring by a debt factoring company allows the seller to manufacture the order while offering financing to the buyer. A lot of companies are in the need of accounts receivable financing to function.

That is how they manufacture or ship their goods without asking for prepayment from their customers. Factoring these invoices help these businesses to improve the company’s cash flows in order to grow their business.

There are several different types of industries that benefit from receivables factoring. In general, the following industries are big on invoice factoring:

Trucking companies and other transport companies, manufacturing and fabrication, wholesale distributors, professional services, healthcare and sometimes and even staffing companies.

There is a misconception that factoring is only for freight brokers and trucking businesses or it’s best for trucking industry but it is far from the truth.

Wholesale and manufacturing companies benefit from this factoring service even more.

These companies typically have a greater need for factoring because of the sheer amount of invoices they send out combined with their tight cash flows.

This funding option is best for businesses that need immediate cash to pay bills or make a large purchase, such as inventory. Factoring is best used as a short-term funding option because fees can be expensive if customers take more than 30 days to pay their invoices.

Invoice Factoring As A Business Loan

A business that uses invoice financing gets a loan from a bank that lends on the value of outstanding invoices it has.

You’ll need to make payments like any other loan, and your business will still be collecting payments from your customers per usual.

Invoice factoring occurs when a business sells its invoices to a factoring company at a discount in exchange for immediate cash.

The factoring company then owns the invoices and collects payment from your customers. Factoring transactions are straightforward and easy to use.

Traditionally, factoring has been a relationship driven business and factoring transactions have been largely manual and frequently involving a face to-face component as part of the relationship building process or due-diligence phase.

By offering this financing, they may land larger deals. For example, some larger companies only buy from vendors that offer at least 60Net, 90Net or 120NET financing.

What Does Factoring Mean?

Factoring companies will buy your customer invoices and actually collect them, if necessary, on your behalf. They will typically pay you in two installments, around 80% or more of the total value of the invoice upfront and then the remaining (after they’ve taken their factoring fees) after the invoice is paid to them by your customer.

What is a Factor?

A factor is the actual 3rd party intermediary agent that provides financing to sellers by purchasing their invoices. A factor is the funding company or source that pays the seller company the value of the receivable/invoice minus the cost of commissions and fees.

What is factoring in business?

Factoring allows businesses to obtain immediate capital/funds based on future earnings derived from certain items due to accounts payable or invoices of their customers or suppliers.

A receivable account represents money due by customers for credit transactions.

What do invoice factoring companies do?

The factoring company offers invoice factoring services that involve the purchase of unpaid invoices at discounted rates. The company takes a percentage of the invoice within just a day. It also manages the invoice and payment processing.

The factornig company purchases invoices from companies that are outstanding due to company financing arrangements. Selling these outstaning invoices helps to boost cash flow. This way the supplier has cash access immediately, instead of waiting 30-120 days to get paid by the customer.

Once the factoring companies purchase these outstanding invoices, they will collet payments from the supplier business’s paying customers.

Debt Factoring Companies

As discussed, debt factoring companies are 3rd party companies that offer financing to the seller to offset the revenue gap due to slow paying customers. In order to get the financing requested, the seller must prove that there is a purchase order or invoice, because the financing only takes place if there is already an order placed by the buyer.

The debt invoice factoring companies is financing the buyer’s deal, by advancing the payment to the seller, even though the buyer will pay at a later time.

There are several debt factoring companies out there all over the world. Some are larger than others and their fees should be pretty similar to each other.

Factoring companies are not one-size-fits-all. In fact, many focus on specific industries like trucking companies, manufacturers, distributors, retailers, etc.

Cost of Factoring

The cost of debt factoring or invoice factoring is not as bad as cash advance loans.

While cash advance loans can be extremely expensive, debt factoring costs are lower because there was already a purchase made by the buyer and the financing company is just waiting for the payment to come in.

Most often the cost of invoice factoring is between 0.5% to 2% per month.The rate depends on the company’s credit history, length of time in business, how many months the financing is offered.

Credit is not always required in order to receive debt financing.

Additional borrowing costs may be added to the total costs, so make sure you fully understand the cost of these types of business loans. Most small businesses are not able to take a loss due to unexpected costs.

What is an example of factoring in business?

Let’s say manufacturing company sells products to one of their wholesale customers for $50,000 with payment due in 120 days. The manufacturer/supplier won’t get paid for 4 months according to the financing agreement.

In order to get paid sooner, small businesses turn to factoring providers. They sell their accounts receiveable invoice to invoice factoring companies for $60,000. This was just an example.

How much does factoring cost?

Factoring companies have APRs of between 8 and 70%, and the majority will cost you between 25% and 40%. The total cost typically depends on the speed at which your customers pay the invoices.

Typically factoring fees are from 1% to 5% weekly plus factor fees from $500 to $5,000.

Most affordable options are quite expensive when compared with the majority of long-term lending but may be an excellent short-term option as it is much cheaper than other options such as businesses cards.

Invoice Factoring Agreement

Make sure you understand the terms completely, because if you misunderstand it even a bit, you may lose money on the deal.

Using business capital or factoring companies for invoice financing is something you need to plan in advance and possibly build the cost into your pricing when you offer financing to your buyers.

Watch out for hidden fees, because hidden fees can completely make or break a deal. Make sure that you compare the factoring fees and other factoring services costs to the detail.

Factoring Fee

Factor fees are the same as the cost of factoring. In life and business nothing is free. Especially loans, however the cost of factoring is usually cheaper than any business or personal loan, as long as it is taken out for short period of time.

It is best to offer buyer financing for a shorter time and request factoring for a few months only, otherwise the factoring fees might just get a bit too high, especially for wholesale companies, where the margins are already low.

Invoice factoring firms have different quotability requirements, advance rates, or factoring fees than their competitors. A lot of factoring companies provide free, no recourse options.

A factoring company charges the business client a factor fee, which is the fee they charge for the advancement of funds. A good way to think of this advance rates fee is as a discount rate.

For example, if the factor fee is 1% on a $30,000 invoice, then the fee is $300. Keep in mind, that this was an example only.

One of the most important details to consider is the advance rates fee and how much each factoring company charges. It will also likely have requirements that your business must meet to qualify for financing.

There are two types of factoring: recourse and non-recourse factoring.

Recourse Factoring Agreement

This type of invoice factoring is the most common and means that your company must repurchase any invoices that the factoring company cannot collect. You are ultimately responsible for any non-payment.

In this plan, your company is always responsible if your client does not pay. After 90 days, the factoring company can present an unpaid invoice to you for reimbursement.

Non-Recourse Factoring Agreement

Non-recourse factoring means that the factoring company bears most of the risk of non-payment by their customers.

Whether your business plans to go with recourse or non-recourse factoring, it’s important to sit down with a reputable factoring company to discuss their terms.

It may be to your advantage to find a factor that offers both recourse and non-recourse factoring.

A factoring company with a strong credit team can also help you avoid working with clients who have poor payment histories. Regardless of the type of account, a good factor will always make a diligent effort to collect your bills.

The best option for your business is to have customers with good credit and strong payment histories. This allows you to pay lower rates for recourse factoring without worrying about risk.

Debt Factoring: How Complicated Is It?

Debt factoring by a debt factoring company allows the seller to manufacture the order while offering financing to the buyer.

Most often the cost of invoice factoring is between 0.5% to 2% per month.The rate depends on the company’s credit history, length of time in business, how many months the financing is offered. Credit is not always required in order to receive debt financing.

Debt Factoring Advantages and Disadvantages

Advantage of Factoring

The advantages of factoring are huge. As long as the selling company can afford to pay the commissions and fees for the factoring deal, the company can receive large receivables and grow the company.

Some sellers offer the Net30, Net60, Net90, Net120 or even a year financing by passing on the cost of financing to the buyer. Other sellers just deduct it as a cost of doing business, if they can.

While some sellers may turn down deals where the buyer is looking for financing, the creative sellers that work with factoring companies can pick up those deals and grow at a faster rate than those companies that do not.

Disadvantage of Factoring

Working capital is vital to companies since it represents the difference between the short-term cash inflows (such as revenue ) versus the short-term bills or financial obligations (such as debt payments). Selling, all or a portion, of its accounts receivables to a factor can help prevent a company that’s cash strapped from defaulting on its loan payments with a creditor, such as a bank. Although factoring is a relatively expensive form of financing, it can help a company to offer financing to its buyers and take on new jobs.

Invoice Factoring & Cash Flow

The main advantage of working with a factor is that your cash flow improves immediately. You don’t need to have money tied up in slow-paying accounts receivable. Instead, you have cash-at-hand to pay expenses and take on new clients.

Sometimes companies can experience cash flow shortfalls when their short-term debts or bills exceed the revenue being generated from sales. If a company has a significant portion of its sales done via accounts receivables, the money collected from the receivables might not be paid in time for the company to meet its short-term payables.

Factoring Services for Cash Flow Problems

Sometimes short-term debts exceed cash on hand. Therefore, a business will sell enough invoices to collect cash immediately from a factor in order to make their short-term debt payments. It’s not a position a business wants to be in, but it is a financial tool to boost cash flow when needed.

How Fast Is The Approval Process?

The approval process is different for each invoice factoring company. The factoring process can take 1-7 days. Some factoring companies offer same day funding.

Same day funding is not very common, and good credit and history with the invoice factoring company is usually needed.

The factoring process can be broken up into two parts: the initial account setup and ongoing funding.

Setting up a factoring account typically takes one to two weeks and the application process involves submitting an application, a list of clients, an accounts receivable aging report and a sample invoice.

The approval process involves detailed underwriting, during which time the factoring company can ask for additional documents, such as documents of incorporation, financials, and banks statements. If approved, the business will be set up with a maximum credit line.

Some invoice factoring companies are more concerned with the customer’s ability to pay the invoice than credit history of the business owner as they say that they work with those unable to get bank financing for invoice factoring.

Advance Rates

Some lenders offer an advance rate of up to 100%, but some may only offer 50-90%. Things such as age of your business, yearly revenue, invoice examples, and more may be examined to determine the eligibility of funding. Business owners must also have business-to-business or business-to-government sales invoices to qualify for a 100% advance rate.

Debt Factoring Internationally

International financing companies are not that common, but they do exist. The reason that there are not as many international factoring companies, because they have to be insured if the buyer, who is in a different country doesn’t pay their loans on time or do not pay it back at all.

Obviously, the financing company wants to get their money back. If the buyer doesn’t pay, then in case of non-recourse financing, the factoring company assumes liability and will pay the seller whether or not the buyer pays their bills.

Because of this situation and the fact that it is difficult to collect money from international companies, there are not many factoring companies in the world and the ones that do provide international invoice factoring, their advance rates may be lower than companies prefer.

Is working with a invoice factoring companies right for your business?

It may be necessary to hire a factoring company to solve a cash flow problem and to cover short-term expenses.

Invoice finance factoring is an effective solution for companies who want to eliminate the risk of offering credit to their own buyers and use a small business factoring company to help with cash flow and cover the company’s unpaid invoices.

By getting paid for outstanding invoices, the company may use this cash to cover other expanses, like growing the business or taking on new contracts.

Always compare invoice factoring companies, because the terms and the business capital received from one may not be as doable but the other invoice factoring company may offer terms that will absolutely benefit the business.

Sell Invoices

This is how it works when you sell invoices to a Factoring Company: When you sell $100,000 worth of invoices to a factoring company, it may agree to buy them for $96,000, taking a 4% factoring fee of $400. The factoring company usually doesn’t give you the full value of the invoices up front.

Rather, it may give you 85-90% up front, and when your customer pays the invoice balance, you will receive the remaining amount from the Factor.

What is the difference between factoring and invoice financing?

Factoring and invoice payments give immediate cash according to your invoice value. The most important difference between the companies collecting invoices from customers and how they make the payment to the lender is the payment.

The factoring company or financial institution that pays your bills and gets paid by your customers. Invoice financing combines traditional loans with cash, using uncollectable invoice documents to calculate the amount.

You will continue to collect the customer payments and pay the loan. When the factor purchase the invoice you have the invoice that is not due, yet.

How to choose the best invoice factoring company for your business?

Invoicing factoring can help solve cashflow concerns relating to late payments from clients. By having your cash readily available you can use this income to focus on growing.

But finding the right invoice factoring company for your company is essential.

You must find a good invoice factoring agency to evaluate their pricing. It’s an easy way to narrow your choices.

Depending on what type of company you have and the invoices you have, there are different factoring companies you need to look at.

You need to compare quotes from invoice factoring companies, because the main difference you will find is in the type of debt they finance and the rates they offer.

If you found more than one factoring company that you like, just use your gut when you pick one, but make sure you keep the other factoring company’s contact information as well, just in case.

Which Company Should I Avoid?

In general, make sure to avoid any lending company to finance your account receivables that you feel that you don’t trust.

If they are adding additional fees into your factoring agreement and unpaid invoices, like renewal fees, minimums, unused credit line fees, etc, either negotiate if you can and ask them to remove those or move on to another company.

Paying For Your Factoring Services

Invoice factoring companies take payments in different ways, but many take payments automatically. Some of these invoice factoring companies allow you to connect and link your business bank account to their software within your factoring account for easy bill payments.

Best Factoring Companies

It isn’t easy to give you the top invoice factoring companies, because one that is best for your company may not be the best invoice factoring company for another business.

Top factoring companies and actually, most factoring companies work with both startups and established businesses.

The invoice factoring terms may be better for established businesses, though.

Always compare factoring companies invoice factoring service options and factor fees before settling with one.