Polish entrepreneurs have not manage yet to familiarise themselves with the term of factoring, and they are already faced with its various types: maturity-, export-, microfactoring, restructuring-, reverse factoring. How to differentiate between all these services? What to choose for the company from the wide range of services? In order not to get lost in so many various definitions, we should start from the basics. First of all, we should remember that regardless of the selected option, factoring means service which exchanges the invoices issued for customers into cash. Funds received with the use of this financing tool may be assigned by the company for its current operation investments, liquidity improvement.
The vast diversity of the nature of the tool results from its flexible nature. Depending on the needs of a given company, factoring may be modified and optimally adjusted to the expectations of virtually every business. This way, even very small companies may receive funds, if they decide to make use of microfactoring. The level of service is the same as in the ‘complete’ factoring, but its availability is considerably greater. Those interested in this aspect are referred to the section titled Can a small company use factoring?. In turn, big companies may be attracted by the option combining factoring and debt collection, and the funds are ensured the moment maturity dates expire. This way, the receivables inflow is uninterrupted and follows fixed deadlines. These needs are satisfied with maturity factoring – you can read about that in How to use overdue invoices?.
However, the criterion of company size is not overriding. For many entrepreneurs, for example, it is important to hedge their transactions conducted with foreign customers and for them the most suitable will be export factoring, which is explained in detail in the article titled Export: How to push the boat out not to sink? . Other will be particularly interested in the fastest settlement of their liabilities, e.g. those towards suppliers whose semi-finished products are indispensable for production purposes. In this situation, the most suitable will prove Reverse factoring: when WE must pay quickly.
As it is frequently emphasised, factoring service is a good solution either in the period of good and bad economic situation. At present, when companies face more and more serious problems with maintaining their financial liquidity, they more often need complex improvement within the framework of restructuring factoring. The rules of such type of factoring are described in Restructuring of a company – maybe it is worth beginning with receivables?.
As it can be seen from the presented examples, factoring has many faces. Adequate determination of needs and flexible adjustments of service will be possible when the factor has proper specialists in place who know the specificity of the trade and market sector where the company operates. It is difficult to find an optimum variant with no expert knowledge, particularly when the above described forms constitute only some of the possibilities factoring offers.
Published on: 14 November 2016