postheadericon Apex capital corp Factoring – explanation

Anyone who would like to find out more about Apex capital corp factoring in detail, but also in understandable terms, is right on this page. The most important facts about factoring are explained here: What is factoring, what are the advantages, what does it bring to me personally and how much does it cost – here you will find clear answers to all these questions.

Factoring simply explained

The term factoring can best be translated with the word debt collection. This word expresses briefly and concisely what factoring is all about: A company that has trade receivables from customers sells these receivables to a factoring company. This company, the Factor, ensures that the selling company gets the money from its claims much earlier than if it were to wait for the payments of defaulting customers. Liquidity bottlenecks are avoided.

As this receivables purchase is often not one-off but continuous, factoring has become a popular financing option over the last few years, making it possible to quickly, easily and cheaply convert receivables into liquid assets. Above all, factoring, with its rapid financing effect, is a more than adequate alternative to a traditional loan that secures growth and makes corporate finance with vision possible.

Which Functions and Tasks Does Factoring Have?

Factoring focuses on financing the customer’s claims by the factor. This can be used to avoid delays caused by payment deadlines. This pre-financing secures the customer’s liquidity, and bad debt losses are finally a thing of the past. The equivalent value of the receivables is immediately available, which – when used for the repayment of debts – can significantly improve the equity ratio and the creditworthiness of the company. Last but not least, the factor also fulfills a service-providing function as part of so-called full-service factoring. In addition to the receivables, this all-round service also takes over accounts receivable, debt collection and dunning. This outsourcing leaves the factoring customer more resources for his core business.

Frequently it is assumed that factoring is just another word for debt collection, putting the purchase of receivables in an undeservedly bad light. However, the assumption is misconceived insofar as the creditworthiness of both the companies under management and those of the debtors is carefully checked in advance.

What are forms of Factoring?

A distinction is first made between two fundamentally different forms of factoring, namely, on the one hand the fake factoring, on the other hand genuine factoring.

Genuine factoring

The most important keyword in relation to genuine factoring is the risk, which, in contrast to the unreal factoring, is taken over in this type of factoring. In the case of a default, ie if the customer of a company cannot settle the outstanding claims, the factor bears the risk.

False factoring

In the case of a fake factoring, the company that wants to sell its receivables assumes the full risk in the event of a bad debt loss. Although the factor assumes the receivables and the accounts receivable, otherwise the risk remains with the customer. This form of factoring is probably closest to a conventional loan. In practice, the customer of the factor gets paid the money for the claims in a timely manner and, if a bad debt loss occurs, it must pay back to the factor together with the interest.

Comments are closed.