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Factoring

The perfect supplement to classic financing

Liquidity squeezes are increasingly becoming an issue and a threat for companies around the world, across all industries. That makes it all the more important for you to be able to fall back on a reliable instrument with which you can master such critical situations: factoring! Find out how it works here.

What are the advantages of factoring?

  • Improved liquidity through immediate cash flow
  • Realisation of discounts (discounts & bonuses) through improved liquidity to pay for own liabilities
  • Reduction of balance sheet (off balance) and increase in equity ratio
  • Improved rating by financial institutions/banks, leading to better financing conditions
  • More stable financing base and greater independence from banks
  • Improved sales and competitive opportunities by being able to grant longer payment terms
  • Flexible financing that grows with turnover
  • Protection against payment default by domestic and foreign customers
  • Greater entrepreneurial leeway through increased planning reliability
  • Reduced burden for your receivables department and dunning and collection system
  • Off-balance financing approved by auditors

What is Factoring and how does it work?

Factoring is a means of short-term corporate financing. A company sells its receivables from deliveries of goods or services to a factor such as BNP Paribas Factor. In exchange, we provide our clients with the following services:

We promptly pay the open receivables, assume the risk of loss of receivables and deal with the entire receivables management. Generally, factoring can be performed in a silent or open way. In open factoring, the customer is informed that the receivables have been sold and ceded. In the silent version, the customer is not informed that the factor has become the owner of the receivables.

Factoring gives companies rapid access to liquidity. And today that is more important than ever before. The levels and duration of the receivables of many companies is increasing continuously – you have probably experienced it yourself. On average, more than a full month’s turnover has to be pre-financed in Germany. And in the not-so-rare case of a loss of receivables – the number of insolvencies is steadily increasing – your company is then threatened by a critical inventory situation by no fault of its own.

For this reason, more and more companies – from medium-sized companies to large corporations – make use of factoring to meet their growing demand for liquidity. Factoring perfectly complements traditional forms of financing, such as overdraft credits, and should be seen as a part of the overall financing concept.

Of course, this was only a very rough explanation of how factoring works. Every company and every individual case is different. That's why we provide a variety of different factoring products that take into account your specific requirements. But all of them share one trait: They strengthen your company. 

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