Consists of pre-payment of a certain percentage of receivables to the customers arising from their short term and invoice based sales of goods or services.
The percentage of such advance payment varies based on the factoring interest which is determined according to the payment terms, the amount of the receivable and the market conditions.
With the financing service, the seller firm's short term receivables are transformed into cash, the assets structure of its balance sheet becomes more liquid and the company benefits from a regular cash flow.
The guarantee of payment of the receivables assigned in case of the financial incapability of the buyer company, if all the conditions of the agreement between the factoring and the seller companies are satisfied.
Delivery of the sold item without any reserve is important for this issue.
This service offers particularly to the export companies the opportunity to find new customers in international markets and to carry no risk with the guarantee limits provided.
Companies are able to collect the amounts of the goods and services sold at their maturities through factoring companies.
The cash collection services offer the companies the opportunity to save on the number of employees and operational work flows.