Unlock Financial Stability: The Comprehensive Benefits of Factoring Receivables

What is factoring?

Factoring is a technique for financing and collecting financing receivables for companies. Reserved for companies trading on a "BtoB" (Business to Business) basis, factoring involves delegating the management of a company's accounts receivable to a credit institution specialized in this field, called the factor. 

With factoring, all tasks relating to receivables management are outsourced. Factoring is a highly effective financing solution for companies seeking short-term financing. By delegating invoice collection to an external organization specializing in collections and litigation, companies can focus on their growth without worrying about their cash flow.

What services does a factor offer?

Companies face all kinds of financial risks in the course of their business, which can have serious consequences for their cash flow: overly long payment terms from business customers, increasing numbers of unpaid invoices... To anticipate these financing risks, companies can turn to a factor. A factor is a specialized institution that purchases a company's trade receivables and offers factoring solutions.

The preferred solution for companies in difficulty, factoring has long been associated with poor financial health, but today the image of factoring has changed: companies are increasingly relying on factoring as a highly advantageous management solution, even when a company is doing well.

What services does a factor offer?

First and foremost, the factor offers a debt collection solution, taking care of the administrative tasks involved in factoring. But its missions go far beyond that: the factor can also offer cash flow financing and credit insurance to its business customers.

Au Group's experts can help you define your needs and expectations so that you can identify and mobilize the best factoring service providers for your company, whatever its size, sector of activity or even stage of growth.

A company may benefit from factoring if it is: 

• in the start-up phase (factoring compensates for cash shortages) 
• in the sales development phase (factoring protects cash flow against unpaid invoices)
•  in the risk phase (factoring becomes the source of long-term financing in the event of reluctance on the part of banks)

Finally the factoring company has the capacity to support both exporting companies and multinationals in their operations worldwide.

What are the different types of factoring contracts?

The factoring contract is tailored to the specific characteristics of the company, its business and its customers.There are several forms of factoring:

Conventional factoring (or notified factoring)
The factoring company offers financing and a full range of related services.

Confidential factoring (or "delegated management")
The factoring company provides cash and collateral. The company retains full control over the management of its receivables.

Deconsolidating factoring
Reserved for large companies, this solution enables the company to permanently remove the receivables transferred to the factor from its balance sheet.

Spot factoring
Assigns only a few invoices to the factor on a case-by-case basis, depending on the company's cash flow requirements.

Reverse factoring
It finances suppliers, not customers.

With their in-depth knowledge of the wide range of factoring products and services on offer, our AU Group experts can identify the best solution for your business.
Contact us for a personal consultation.