Flexible thanks to factoring
No worries. We have good news. You don't need the bank at all. Thanks to a surplus of capital in the Netherlands, numerous new financing companies have emerged to serve companies in the SME segment. Your opportunities lie in the area of so-called asset-based financing: leasing capital goods and financing accounts receivable (also known as factoring) and possibly inventories and orders.
Where banks, insurers and also advisers are increasingly bound by tight legal rules, factoring companies can be started up quite easily. If you opt for factoring, you will have working capital always available To grow. So flexible thanks to factoring!
5 forms of debtor financing
There are different forms of debtor financing. We list five of them for you.
1. Traditional factoring
- Advance of debtors on the basis of pledged debtors;
- Higher funding than banks (up to 90% of outstanding approved receivables based on the entire receivables portfolio);
- Within 24 hours of invoicing your customer, you have access to your money;
- By shortening balance sheets, factoring offers an opportunity to improve financial ratios related to solvency and liquidity;
- Optionally, stocks and purchase orders can be co-financed;
- Guarantees or securities must usually be provided by shareholders (sometimes also privately); often credit insurance is also required;
- Based on the company's financial data, a credit proposal is written to be approved by a credit committee, looking in particular at profitability and continuity.
2. American factoring
- This is the same as traditional factoring, but in this case the accounts receivable are bought by the factoring company rather than pledged to the factoring company.
3. Single buyer factoring
- In this form, accounts receivable can be offered for funding by one or more debtors;
- In particular, many new factoring companies offer this option through an online platform;
- The big advantage is flexibility; there is no need to finance an entire portfolio. Only when a (temporary) need arises can it be used;
- Note that this form of financing is relatively expensive compared to traditional factoring.
4. Single invoice factoring
- The same as single buyer factoring, but with this form, a debtor receivable can even be offered for financing on a per-invoice basis;
- Since the invoice must state that payment can only be made in full discharge to the factoring company, it is often not convenient to have the same debtor pay directly one time and to the factoring company the next.
5. Hybrid forms of factoring
- Many new initiatives continue to enter the market offering increasingly flexible financing. Digitalisation plays an important role here.
Is factoring something for your business?
Which form suits you and your company? We will be happy to find that out with you. At Xolv we have years of experience in the field of factoring and know the market like no other, which means we always come up with the right, reliable parties doing business. Moreover, we are 100% independent and can work with you to write an optimal financing application. Is factoring something for you? Our specialists are ready to help you!
Read also: Doing better business with more working capital or if you want more information on working capital and how to calculate it, read this article.
