overview
Factoring with Infinite Paperless Suite
Factoring is one of the oldest forms of financing and is still relevant to almost all businesses across the globe. Factoring is a form of commercial finance whereby a business sells its accounts receivable (in the form of invoices) at a discount. Factoring is considered off balance sheet financing, in that it is not a form of debt or a form of equity, which makes it more attainable than traditional bank and equity financing.
Factoring is a direct channel for SMEs to access capital, these engines of growth supporting the economy around the world especially in the emerging countries like in the CEE and SEE region and also in the Middle East.
In the Middle East area, some of the governments like Dubai has committed itself to increased infrastructure developments, along with the growth of the SME sector. We see growing awareness and requirement for structured trade finance products and for the improved technology to drive it in the Middle East area.
Preparing the ground for 2020 sustainable growth can only be reached by the transformation of business models that holds digitalization effectively. Besides digitalization, the growth of the sector also depends upon the regulations and the expertise of the sector in export factoring.
Industry challenges
Factoring challenges
When your small business or mid-sized company needs working capital with flexibility or fast financing, factoring companies provide needed cash flow. A factoring company takes on the burden of waiting for accounts receivable invoice payments and in return, provides your business with a timely cash advance. This receivable financing is a flexible and fast financing alternative to traditional bank business loans. Many also refer to receivables financing as invoice factoring.
Companies that often benefit from long-term factoring financing include those that usually face business scenarios, such as:
- funding required to maintain substantial inventory or materials for production,
- long-duration sales cycles,
- volatile cash flow,
- slow-paying customers, such as large corporate buyers or government agencies, or
- seasonal sales.
Factoring fuels your business growth when your company is presented with opportunities, such as:
- unanticipated or urgent customer demand for products or services,
- timely opportunities to expand into emerging markets,
- innovations that offer a chance to invest in new technology and equipment, and
- options to expand offices, production workspace, or inventory warehousing.
Factoring also supports the strength of your company with cash liquidity when your business goals are to:
- obtain immediate cash to finance any business use without creating debt,
- startup a new venture or line of business with no financial track record
- infuse cash into your business as if using it as a bridge loan,
- improve your company’s business credit rating,
- benefit from trade discounts,
- make timely tax payments, or
- handle State tax or Federal tax liens.
When a company faces short-term risk jeopardizing business operations due to a cash flow crunch, factoring is a remedy for:
- operating losses,
- payroll funding needs,
- maxed out lines of credit, or
- bank turn-downs.