Written by Beat Waldvogel
Factoring is a modern financing option that has been practised for hundreds of years. The advance payment of debtors or creditors is nothing new. The principle is always the same You sell receivables and these are purchased by the factor and immediately financed.
You gain immediate liquidity. A good factor finances your receivables within 24 hours. Immediate liquidity helps your company to develop further and you gain financial stability. Conversely, this helps you to gain good prestige with customers and suppliers.
Financing via factoring is independent of banks. With factoring, your creditworthiness is based on your customers. Your limit grows according to your customers. Unlike with banks, the limit is not based on your balance sheet but on your customers. If your company grows positively, your credit limit with the factor increases congruently. With good factorers, growth is seen as an opportunity and not necessarily as a risk.
With factoring you sustainably improve your balance sheet. The sale of receivables shortens your balance sheet. You also massively increase your ROI. This in turn leads to a sustainable improvement in your rating.
With factoring, you gain a bit of independence. The typical company in Switzerland has one or two banking relationships. Normally, this is not a bad thing. However, such a strategy also entails risks. Due to Basel III restrictions, banks can and may only finance everything within the debt capacity. Especially in difficult times, this can lead to friction. With factoring you avoid this problem. Modern factoring companies also offer you congruent solutions like banks in purchase financing,
With factoring you earn money. Factoring is not free. However, if you as a company use this instrument correctly, you will earn additional money with factoring. Making use of discounts, improving purchasing conditions and increasing turnover are just a few arguments on how you can efficiently increase your earnings with the additional liquidity.