We offer our clients three models of cooperation presented in the diagrams below.
Factoring is a type of financing that helps improve cash flow for businesses that struggle with late payment of invoices. Usually the factoring company buys the client's receivables. This purchase gives the customer access to immediate funds, which provides cash flow for business and development. Factoring is the answer when the company needs a quick method of financing, does not have creditworthiness, or does not have other appropriate forms of security.
In order to make a factoring service to be available, there must be three entities (the factor who purchases the receivable, the one who sells the receivable, and the debtor who has a financial liability that requires them to make a payment to the owner of the invoice). The contract is concluded between the factor and the owner of the invoice. The debtor has no influence on the signing of such an agreement and its terms.
The following receivables may be transferred to the factor:
Currently, there is no factor supporting the activities of small and medium-sized enterprises in the medical sector on the medical market. In order to achieve balanced development and financial stability of companies in this segment, they are looking for large, reliable partners. Unfortunately, large entities often pay slowly. Our financing programs help increase the financial strength of companies in this segment. We can convert invoices into cash in no time. This improves cash flow and provides financial foundations for the development of factoring companies.
Recourse and Non-Recourse Factoring.
Recourse factoring is an agreement where a company sells its current invoices to a factoring company with the understanding that the company will buy them back if they go uncollected. This factoring plan is generally affordable since the company is agreeing to absorb some of the risk involved in the transaction.
Non-recourse factoring allows a company to sell its invoices to a factor without the obligation of absorbing any unpaid invoices. Instead, if the debtor renege on their payments or pay their invoices late any losses are absorbed by the factor, leaving the business unscathed.
Reverse factoring, also known as supply chain finance or supplier finance, is a financial technology solution that mitigates the negative effects of longer payment terms to help buyers and suppliers optimize working capital. Under reverse factoring, the suppliers sell invoices to banks or financial institutions at a pre-determined discount rate. By selling invoices the supplier gets immediate access to cash whereas buyers get more time to pay the invoices. We can say that reverse factoring is a three-way financing process where in supplier, buyer & financial institution, all three are involved in the transaction. Reverse factoring helps in optimizing working capital for both the parties & provides liquidity to business. The catch here is that the discount rate at which the invoice is settled by the bank/financial institution is lower than buyer’s own sources of operating funds. Therefore, we can say that reverse factoring is cheaper short-term finance option for buyers.
If you are interested in financing your business, want to become our shareholder, or want to ask another important question - contact us.