Factoring simply explained For You Now

With Apex capital corp factoring the entrepreneur sells open claims to a third party (factoring company). At the time of the sale of the invoice, the receivables may not be overdue and the invoiced services must be undisputed. The factor enters into the rights and obligations of the seller with the purchase and immediately pays the previously agreed purchase price.

The factoring is usually between 80 – 100% of the gross invoice amount (less a factoring fee). The difference to the full invoice amount (blocked amount) is paid by the factor to you after settlement of the invoice. Factoring makes your customers practically cash-in-hand.

If your debtor is unable to pay the bill due to insolvency, the integrated factoring system takes effect in real factoring.

As the factor becomes the legal owner of the purchased receivables, it pays particular attention to their recoverability. Demands from production, trade and service are usually factorable. If you work on the basis of work contracts, according to VOB or in project business, the number of providers is limited.

Process in real factoring

The sale of receivables until payment takes place in several steps. Depending on the factoring variant, turnover and factor, the amount of the security deposit may differ. Depending on the provider, the invoice is transmitted by e-mail, in the factor’s online portal or via the IT interface.

Factoring advantages and functions in the overview:

  • Pre-financing your customer requirements
  • Protection against bad debts
  • Takeover of dunning and debt collection (debtor management), if you wish
  • Relief of your bank and current accounts
  • Improvement of equity ratio and rating according to Basel II & III
  • Competitive advantage with regard to the granting of customer payment terms

Sale of receivables and customers Acceptance:

The sale of receivables is now accepted by most companies (customers), since they insist on ever longer payment terms. In the event that there are agreements with customers about cession prohibitions, silent factoring (without disclosure) is available to you.

In the open procedure, the sale of receivables is visible to your customer, but not in the silent process. Approximately 95% of all entrepreneurs use the open procedure, since this variant is cheaper and places lower demands on the creditworthiness, equity and earnings position of the company.

Declaration-factoring variants

Requirements, performance acceptance and documentation: Since the purchase of receivables is based on the reinsurance ability of the debtor, the factor waives the provision of standard bank collateral. Your claims must be free of third party rights. In the case of an existing assignment of claims (e.g. global assignment to secure the current account line), this must be approved by your bank.

Comments are closed.