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Liquidity instead of outstanding receivables


The volume of all supplier credits is many times greater than the volume of all current account credit lines. Your company must also retain liquidity during the period of time prior to the payment of an invoice and therefore your company becomes a major refinancing partner for its customers.

Even as it pertains to reliable customers, the time period between a receivable coming due and the final payment being received can increase. Quite often, invoices are not paid at all. That has a negative effect on a company’s liquidity and cash flow. The worst case scenario: The company’s own existence is jeopardized.

Liquidity and security for your business

Factoring represents a form of financing that can no longer be considered trivial. This especially applies because of the banks’ current restrictive lending policies and a significant increase in bad debts.

For match-funded financing, a company sells its trade receivables to a factoring institution and, in return, receives instant liquidity, usually up to 90% of the trade receivables amount. The purchaser of the receivables assumes the entire del credere risk (real factoring) as well as, if necessary, the collection of receivables past due.

For so-called “full-service factoring", the factoring institution also assumes the entire receivables management.

As a result of the instant liquidity, the company can use purchasing advantages by exploiting supplier discounts and reducing amounts due to banks. The resulting reduction in liabilities increases the equity ratio and improves the company’s own rating.