What is Factoring?

QNB Finansbank

What is Factoring?

Factoring provides basically three separate services to the seller firm by assigning the term receivables arising or to arise from these sales of companies that have invoiced and check goods or service sales; It is a financing method in which guarantees, receivables management and finance are offered. Factoring is carried out between commercial debtors, factoring companies, and commercial enterprises that sell goods or services.

In simpler terms, factoring provides funding for you to successfully grow your business by providing regular cash flow so that you can fulfill your fast financing transactions. With factoring, you can transform your sales into cash and achieve a healthier growth of your business.

Tradesmen and SMEs gain advantage by reaching cash quickly and reliably with factoring service.

Basically the factoring transaction,

There are three parties in a factoring transaction: debtor, seller and factoring company.

Transferring the invoiced receivables to the factoring company,

Follow-up of transferred receivables by the factoring company

Collection of transferred receivables by the factoring company

The risk of non-payment of receivables based on service is undertaken by the factoring company

Keeping records of receivables,

It is based on a certain amount of advance payment in return for the transferred receivables.

What are the Advantages of Factoring?

With factoring services, companies that convert their invoiced check receivables into cash will save time and resources as the follow-up, collection and management of the companies will be undertaken by the factoring company. In this way, they find more resource opportunities and more time for business activities.

Medium-sized companies that benefit from factoring services can obtain funds by converting their term receivables into cash without turning to external resources. In this way, they increase their competitive power and market share and at the same time ensure that their cash flows are regular and efficient.

Especially medium-sized companies can easily convert their sales made to large companies as open accounts into cash with factoring services. By making cash purchases from supplier companies, they obtain discounts.

What are the Advantages of Factoring for SMEs?

Factoring services are a system for meeting the cash needs of companies. It supports the growth of commercial enterprises by providing quick solutions to their cash needs. Factoring, one of the finance solutions, is used by SMEs, tradesmen and manufacturers. All companies that carry out international or domestic trade and have term receivables can benefit from factoring services. SMEs that benefit from factoring services will have an advantage over their competitors.

SMEs that have provided cash flow with factoring gain an advantage by increasing their competitiveness against competitors. The amount of receivables and financial debts decrease. The balance sheet becomes fluid. In this way, SMEs benefiting from factoring services also increase their credit worthiness. The receivables of internationally operating SMEs are followed up and payment is made on time.

What Will You Gain With Factoring?

You provide a guarantee against the risk of non-collection of receivables.

By having up-to-date and reliable intelligence information about the financial strength and credibility of the buyer, you will reduce your collection risk and obtain a quality customer portfolio.

By reducing the accounting burden with factoring services, you can get discounts and save money by paying suppliers in advance thanks to the financing you obtain with reduced administrative expenses.

You can make your balance sheet liquid by providing regular cash flow from the financing source you obtain through assignment.

Time is paramount. With factoring services, you can ensure that your business always goes smoothly without waiting for a maturity. All procedures related to customer reliability research, collection follow-up and loans are provided by the factoring company. By saving time, you can make future-oriented business plans and gain an advantage over your competitors.

Factoring companies contribute to the growth of businesses by providing financing. In this way, your debt collection period is reduced and your commercial debts are reduced. With a stronger financial structure, your company grows.