1. Is Factoring an alternative and/or complementary form of finance to bank credit?
2. Is Factoring more expensive than bank credit?
3. Does the Factor get in the way of business relations between supplier and customer?
4. Is Factoring the last resort for companies in crisis?
5. Factoring resolves temporary short term demands?
6. Is Factoring slow and bureaucratic?
Is Factoring an alternative/or complementary form of finance to bank credit?
This is an undermining statement which tends to highlight the financial aspect of factoring and puts the aspects more related to the concept of "service" in the shade (credit management and administration, insolvency risk protection, etc.).
The comparison with bank credit is in any case inappropriate since the Factor's approaches to giving credit are different. The Factor finances their client on the basis of the quality of their customer portfolio, whilst the bank gives credit on the basis of the assets and liabilities of the borrower.
Back to top
Is Factoring more expensive than bank credit?
Factoring is a complex service and therefore DIFFERENT from bank credit.
The Factor manages and administrates their client's credit, the bank does not; the Factor evaluates the clients customer portfolio and protects against the risks of commercial insolvency, the bank does not. It is therefore logical such different products be subject to different prices and that there is no basis for comparison based exclusively on the rate of interest on advances given.
Back to top
Does the Factor get in the way of business relations between supplier and customer?
From the moment the customer gives us the task of managing the customer's debts, the Factor will do everything in the best possible way, in the interests of both parties.
This objective is reached the moment the customer perceives the advantages and improvements in comparison with the previous situation. Such advantages and improvements are shown by the added value the Factor can contribute to the assets the client has entrusted him with, i.e. his debts. Added value means shorter average collection time, a reduction in unpaid bills, rationalization of conditions and terms of payment. Added value means everything that allows the client to decrease his costs and/or increase his revenue. All this can mean cost in terms of business relations with customers, whereby the Factor does not accept excuses from debtors, determined to pay as late as possible, despite having the financial means to do so on time.
In addition to this, the Factor is there to relieve debtors' temporary difficulties, giving them extensions or agreeing personalized payment plans with the customer's consent. So, firmness in carrying out its mandate but at the same time flexibility, according to the situation.
Back to top
Is Factoring the last resort for Companies in crisis?
Factoring is a service able to offer solutions to a rather mixed range of business demands; it is not the last resort for businesses in crisis.
What is certain, is the Factor assesses and entrusts its own clientele with a methodology which is often different from credit institutes; for example a young company with an unconsolidated asset and financial structure, yet with successful products on the market and a healthy client base, will obtain credit from the Factor much more easily than from the bank, which demonstrates quite simply that the Factor's viewpoint is characterized by a dynamic and commercial assessment of their client, while the bank's viewpoint places more emphasis on their background and ability to pay back quickly.
On the other hand, the very mixture of its consumers demonstrated the UNIVERSAL nature of factoring. The increasingly widespread presence of the most significant companies of undisputed standing among factoring consumers is the best proof that this type of service plays an important role in the range of opportunities offered by the market.
Back to top
Does Factoring resolve temporary short term demands?
It is only right to specify the need for factoring can arise at any point in a company's lifecycle, for example a growing enterprise will see the need to gain financial support to expand its current capital as a priority in order to bridge the funds gap and/or the inadequacy of bank credit. On reaching maturity the same company will state that reasons for continuing to use factoring increase rather than decrease, in so far as the need to finance current capital will be replaced with protecting themselves against the risk of client insolvency, managing the debt portfolio rationally and economically, expanding sensibly in foreign markets and so forth.
Experience teaches us that customer LOYALTY is marked as the range and QUALITY of services offered by the Factor is wide-ranging and coherent.
Back to top
Is Factoring slow and bureaucratic?
Our high operational standards (value-service-productivity) disprove this statement. At the beginning of the relationship, Business Finance is able to provide its own response to the potential client in the space of a few days, on receipt of all necessary documentation for the preliminary factoring procedure and all without taking into account the amount of credit requested.
Once relations have begun, Businsss Finance is able to give equivalent amounts for credit transfers carried out by the clientele in the space of forty eight hours, for operations that do not present anomalies regarding establishing and features of the relationship.
Each Business Finance customer is assigned a client manager who exclusively works with you to understand and develop your facilities and business.
