Use of Factoring in companies


Factoring is the most profitable, fast and efficient financing medium for companies that sell products, in order to counteract the disadvantages of credit sales with long payment times. Through the Factoring, companies put into the hands of professional experts the management and administration of their sales on credit, both nationally and internationally.
This formula encompasses a whole series of services of analysis, administration, management, sales financing, billing and collection of the client portfolio. Its use can eliminate the risk of unpaid bills, reduce delays in billing, significantly reduce administrative costs and simplify accounting.
Among the companies that use Factoring services, 80% are SMEs for whom this financial service is a very valuable source of management and financing of their sales. And with regard to sales abroad, factoring facilitates the possibility of expanding markets with the assurance that these operations will end without any problem.
There is no defined profile of companies that use factoring, rather the delimitation is given by the product sold and the conditions of payment.
Factoring costs depend on contracted services and have two components:
  • Financial: The interest rate applied at any time by the market to any financing operation.
  • The Factoring Rate or percentage of bills transferred: Will vary according to the volume of business, the number and amount of invoices, the sector in which it operates, the level of risk of the debtors, the assumption or not of the coverage of the Risk of insolvency by the Factoring Company, etc.
  •  
Factoring will impact your business more effectively if:
  • Make sales to credit (more than 30 days).
  • Use the transfer system (electronic way) or the check as payment.
  • You need financing for your production and sales activities.
  • It has a limited number of customers that represent a significant part of its sales revenue (which means a concentration of risks to be covered).
  • It is in the process of expansion and you need funding to continue growing.

Factoring in Colombia is carried out by different firms. The ideal is to have a serious and trajectory company in this type of operations, responsible in the commercial, financial, operational and administrative area, whose main mission is to advise and satisfy the liquidity needs of clients in Bogota, Cali, and Medellin and Main cities of Colombia. In Le Factoring nothing better than to act in an agile and timely manner, allowing to fulfill projects and the provision or delivery of products and / or services.

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