Perhaps a lot of entrepreneurs, having learnt what factoring consisted in, decided that this service was not for them. Medium and large enterprises, the turnover of which reach the level of a lot of millions of zloty, may use such form of financing, but not my small business… But in fact, factoring services are addressed also to smaller companies and in such case there are often called ‘microfactoring’.
In case of a factoring service offered to micro-companies, it is enough for income to be on the level of several hundred thousand zloty annually – this condition is fulfilled by the majority of small entities. What is important for the companies of this size is the fact that the alternative financing tool, being microfactoring, does not encumbrance the creditworthiness of the enterprise. Additionally, it is accessible more easily and quickly than a working capital credit. What is more, non-banking Factors offer more flexible approach in granting of financing, which is extremely important for small companies, especially in the current conditions of economic slowdown.
Apart from fast cash, the service has also other advantages – for example, it relieves the entrepreneur from the control of timely payments of the customers. In other words, you do not have to deal with checking of the credibility and solvency of the payers or debt collection in case of lack of payment any more. It is all done by the Factor instead of you and you may concentrate on your basic activity. And additionally, you use a convenient Internet system for financial situation monitoring, through which you may order repurchase of VAT invoices, view the state and history of settlements with the payers.
Microfactoring improves the finance of your company. Not only the turnover of the enterprise but the level of service of own liabilities improves. Another pretty significant advantage is positive change of payment habits by the customers, disciplined by the Factor.
The factoring companies that render micro services allow small enterprises to use the financing tool that may be crucial for their safe and fast development. Therefore, a pragmatic entrepreneur should be aware of the solutions available on the market, adjusted to the conditions of functioning of the smallest companies.
Published on: 24 October 2016