Factoring or receivables credit (B2C and B2B): an advantageous source of financing, allowing early conversion of the company’s receivables into cash assets.
In particular, factoring is suitable for young entrepreneurs with rapidly growing businesses who cannot or do not want to finance growing turnover with their own cash assets or with bank loans, and who would like to insure themselves against losses on debtors.
Factoring is a type of financing in which a financial company or factor buys other company’s accounts receivables, i.e., the invoiced money that the company is owed by your customers.
When a seller sends its customer an invoice, the factoring company pays the seller between 70% and 90% of the invoice’s value immediately. The seller gets the balance when the customer has paid the invoice.
This form of financing helps businesses with cash flow problems to close the gap between invoicing and incoming payments and solve the issues with working capital.