Factoring - what can you gain?

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Factoring is a dynamically developing financial service that allows you to obtain cash that would normally be frozen on deferred payment invoices. Factoring services are increasingly used by Polish entrepreneurs to finance current sales. Read on and check the benefits of factoring.

Factoring is a service that finances the sale of companies with a long history. The first beginnings of factoring date back to the time of winning North America, when the colonizers needed financial resources that would reach them faster than the crops they exported to Europe. Factoring must involve three entities: a factoring company called a factor, a factoring company, i.e. a company using factoring services, and a factoring contractor.

Factoring is becoming more and more popular

The growing popularity of this type of service in Poland can be proved by data from the Polish Factor Association. According to the information, in 2017 alone, nearly 9 thousand Polish companies benefited from the services of companies associated in PZF, and each year the interest in such services is growing. Satisfied entrepreneurs who have introduced factoring to their business activity boast about financial independence from contractors and minimizing the risk related to payment blockages, which is one of the biggest problems faced by Polish entrepreneurs.

Why should I bet on factoring?

If you run a company that sells goods or services with deferred payment, factoring is a service for you. It allows you to get up to 90 percent of the value of a single sale in just 24 hours after the invoice is handed over to your invoice provider. Factors in a very short time analyze a given document confirming sales and pay advances, which can be used for any purpose.

90 percent of the value of a particular invoice in the form of an advance payment may be used e.g. for payment of salaries to employees, repayment of amounts due to ZUS (Social Insurance Institution), Tax Office, repayment of leasing instalments or reimbursement of amounts due to other business partners. The remaining 10 per cent shall be paid on the due date indicated on the invoice. Cost factoring services are an alternative to traditional methods of acquiring working capital in companies, such as credit lines or bank corporate loans.

Factoring with or without recourse?

One of the most popular factoring services is non-recourse factoring and recourse factoring. The two popular methods differ in only one key aspect. At the stage of obtaining financing, they are almost identical. The main difference lies in the fact that the risk of non-payment of the factor by the counterparty is taken over. As part of non-recourse factoring, the factoring agent transfers the risk to the factor and receives financial resources even if the contractor has not actually paid even the zloty. In recourse factoring, the risk is not transferred and the factoring company itself has to assert claims against the defaulting contractor.