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Factoring has both positive and negative aspects. Here we will talk about some of the more
Let’s take a look at some of the positive sides Factoring :.
Factoring companies usually take care of the management, Legal and accounting responsibilities associated with handling accounts. While those who can have access to information about the status of loans customers, and how many accounts have been collected. Information that you may or may not have had before.
It is more efficient cash management and better monitoring of government debt. Factoring provides an assessment of the risk. When there is a decrease in commercial inquiries the company’s clients.
Factoring can be used as a financing tool and can pay in advance up to 85% of the accounts.
When you use Factoring, you will not have to worry about billing and can find time and efforts on more lucrative prospects. On top of that, Factoring companies will cover ratio (it can even be 100%) of the total accounts receivable.
General Factoring companies will accept changes in currency based on the exchange rate set at the time of contracting them. All this, while taking care of administrative tasks throughout the collection process
drawbacks Factoring following :.
Factoring is not free, you must pay the fee can be increased. In addition, some criteria for selection of accounts can be challenging (for example, all customers living in the same area, etc.)
Factoring is often only to companies in Western countries. If your company has business in other non-Western countries, you may not be able to use it. When using Factoring can also have the disadvantage that depersonalizing the process of collecting accounts receivable and reducing contact with some of your customers.
In addition, the Factoring business is to deal with the debt to your customers that they may not be as good as you want. This is one of the risk not choose Factoring company carefully.
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