Problems that companies face
In the growing stage
- Increase in administrative staff
- Entry into higher-risk markets
- Increase in credit to clients
With seasonal activity
- Difficulty in sizing their administrative staff
- Large financial involvement in credit to clients
Recently incorporated
- Absence of administrative staff (light structure)
- Problems facing growing companies
- Difficult access to credit
All companies have concerns
- To reduce the risk of credit to clients
- To reduce the immobilisation of credit with clients
- To eliminate uncertainty in receipts
- To have the ease of depending on someone whose job is to ensure collections
How factoring works
A - Submit an application to join
- Fill in a questionnaire.
- Applicant´s economic and financial data:
- 3 most recent balance sheets;
- most recent trial balance;
- most recent trial balance of clients. - List of clients proposed for factoring with the following information on each of them:
- Identification;
- Address;
- Normal purchase value;
- Payment conditions;
- Desired credit limit.
B - Analysis and decision to operate
Once these items have been submitted, the Factor shall define:
- Payment conditions
- Global limit assigned to the subscriber
- Limit accepted for each debtor
- Debtors on whom it may not agree to provide credit insurance.
C - The Factoring contract
Having reached agreement on these conditions, the subscriber and Factor sign a contract for one year, renewable.
These are the conditions for getting started with Factoring.
D - When is the assignment of receivables processed
The assignment of receivables takes place at the time in which the Factor agrees to accept the receivables included in a proposal submitted to it.