Factoring of debtors can be great tool to generate cash flow for your business, especially in an economy that banks are unwilling to provide businesses with overdraft facilities and other loans.

Factoring can also assist in negotiating better discounts with your suppliers through early settlement of accounts.

You will be able to expand faster knowing that, as sales increase, funds are available.

A huge number of businesses struggle because of bad payments from debtors.

You could also easily evaluate your customer's creditworthiness.

The factoring process works as follows:

The three parties directly involved are: the supplier, the debtor, and the factor. The factor receives a cession over the invoice to a debtor. Thereafter the factor provides a percentage of the amount (normally 80%) of the invoice to the company who sells the receivable (the supplier). The debtor on 30/60 days makes payment directly to the factor. The retention less the fees are paid back to the supplier after full payment has been received. All invoices need to be underwritten by an insurance company.

The main company to be used for credit insurance is Credit Guarantee

Credit insurance provides protection for a company against non-payment of debtors. Non-payment can be in the form of insolvency or default.

Feel free to complete the contact form for more information regarding factoring.

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