Best Factoring and the Results With the Sum

Factoring is an instrument of sales financing that is popular with medium-sized and small companies. The principal of the factoring sells a claim resulting from goods or services, minus an interest rate and fees, which make up 20 to 30 percent of the amount, to an external factoring company. Within one day, up to 2 days, the client receives 70 to 80 percent of the receivable sum from the factor and the factoring institute now takes care of the collection of receivables. This assignment of claims brings many advantages for a company. The risk is borne in most cases by the factoring institute, so that a company always receives the immediate liquidity, even if a payment default occurs.

The Possibilities

There are possibilities of current or single assignment of claims, single factoring or standard factoring. In addition, services such as accounts receivable or collection can be taken over in full-service factoring. In addition, a factoring client pays additional fees, which, depending on the company, amount to between 0.5 percent and 3 percent of the receivables. The factoring accounts receivable is very important for the following.

The Right Case

In most cases, the conclusion of a factoring contract in Germany, the delivery of the risk to the factor is agreed, which protects the client against default. Depending on the creditworthiness of the debtor, however, this also means a factoring fee that is 0.1 percent to 0.5 percent of the receivables higher than without taking over the protection.

  • As a Company, one has to think twice about whether to choose open factoring with the inauguration of the debtor or quiet factoring in secrecy vis-à-vis the debtor. For every company there is the appropriate form of factoring, so let’s advice you best by a professional company, which is the right solution for you to procure liquidity, plan in good time and improve the balance sheet and the rating of your company!

Each company has capital tied up to pay for current bills or for investment. In the context of internal financing, a company can obtain liquid funds. One of the benefits of this type of financing is that a company does not rely on external money, such as bank loans or supplier credits. Instead, the accounting department determines which capital is tied up in the company and can be released through asset diversification. In this case, the company owner has various measures available that cancel the capital commitment.

Measures for capital release

Financing through capital release can be achieved through these measures:

  • Asset sale
  • Lease or lease of fixed assets
  • Depreciation
  • Reduction of stocks
  • Reduction of receivables

Sale of Assets and Leases or Leases of Fixed Assets

The fixed assets of a company play an important role in the capital release. Machinery, vehicles, land or own factory buildings are expensive to buy and maintain. For financing, an entrepreneur may decide to dispose of certain goods. If sold assets are still to be used, they can be leased again as part of sale-and-lease-back. So the new owner is responsible for the maintenance and the seller saves money. In addition to tangible assets, intangible assets, such as patents or licenses, may also be sold for capital release.

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