Even when knowing the essence of factoring operation, there are still many unclear and doubtful issues. One of them may be practical operation of this solution in the context of accounting. Although factoring services become more and more popular in enterprises, accountants seem not to share the enthusiasm of entrepreneurs. What may be the reason?
The main reservation raised by accountants is a fear to lose control over accounting and bookkeeping processes. Moreover, they are afraid that they will have greater scope of duties and, because of that, they will lose the supervision over cash flows in the company. Aversion of accountants towards factoring also results from their conviction that when they use this service, they will be burdened with more work to do and greater responsibility.
In fact, there is nothing really to be afraid of. Factoring does not add more effort for the accountants, but simply limits it considerably. This is because an accountant cannot make settlements and keep records for many customers, but for one only – the factor itself. Thanks to factoring, an accountant does not need to record sales or make reconciliation of balances. In case of a company that deals with sales for many small customers, it may involve considerably lower number of documents to be filled in. What is more, all settlements with customers still remain under the permanent control of the accountant. Summing up, factoring services do not deprive of the possibility to control cash flows in the company.
It also often happens that entrepreneurs burden accountants with the obligation to demand overdue payments form its customers. It is worth remembering that some factoring companies offer additional useful services, such as debt collection. Thank to that they may release accountants from the obligation to control receipts, issue reminders, order for payment and perform other disciplinary works against payers. Such service may be very effective thanks to individual scenario of actions elaborated for each receivable. While outsourcing debt collection, a creditor is provided with complex services and relieves its employees from excessive duties.
Published on: 14 November 2016