Some of the services that the factoring companies provide are as follows:
Factoring companies are in charge of the administrative management of the accounts receivables you provide, and also their collection.
Coverage of the risk of unpaid if the debtor proves to be insolvent. The factoring company will pay the exporter the amount of the bill by drawing on its own funds. However, it can not provide unlimited coverage. That is why after a study of solvency, it will set for each debtor a limited coverage.
The factoring company can give the company up to 85% of the value of all invoices submitted in the form of a credit. With these funds, the company will be able to face their daily demands of cash flow. Cash flow needs will determine if the company will request a partial or total credit. The credit is considered as paid when the customers pay the factoring company what they owe to you.
The factoring companies protect users from the fluctuations in the exchanger rates of currencies when the clients are in other countries.
While most companies using factoring are interested in all the services offered against others choose to keep either of these functions on their own.
The rates that Factoring companies charge ranges from 0.5 to 2.5% of the amount of accounts receivables they will collect. In general, these rates depend of a series of factors that are related to the customer and the administrative tasks related to collect the invoices. In order to set a fee factoring companies consider:
First, Factoring companies will identify what are the administrative costs that they would incur when collecting the accounts receivables. These costs are reduced when the customers have a high likelihood of paying back. When the company deals with exporting, Factoring companies will also consider the number of countries and clients contracted. The more Accounts Receivables, the lower the fee the Factor will request. The formula they use is also a crucial matter to determine the fee.
Factoring companies may also charge you for their speed in collecting the invoices. You will pay a bit more if the Factoring companies manage to recover your receivables in a short period.
In order to establish what the real cost of factoring is, you should not only add the fees and the interest rates you will pay. The reason for this is that Factoring companies save you money in labor and administrative work, and they also provide you services as well.
Factoring companies are in charge of the administrative management of the accounts receivables you provide, and also their collection.
Coverage of the risk of unpaid if the debtor proves to be insolvent. The factoring company will pay the exporter the amount of the bill by drawing on its own funds. However, it can not provide unlimited coverage. That is why after a study of solvency, it will set for each debtor a limited coverage.
The factoring company can give the company up to 85% of the value of all invoices submitted in the form of a credit. With these funds, the company will be able to face their daily demands of cash flow. Cash flow needs will determine if the company will request a partial or total credit. The credit is considered as paid when the customers pay the factoring company what they owe to you.
The factoring companies protect users from the fluctuations in the exchanger rates of currencies when the clients are in other countries.
While most companies using factoring are interested in all the services offered against others choose to keep either of these functions on their own.
The rates that Factoring companies charge ranges from 0.5 to 2.5% of the amount of accounts receivables they will collect. In general, these rates depend of a series of factors that are related to the customer and the administrative tasks related to collect the invoices. In order to set a fee factoring companies consider:
First, Factoring companies will identify what are the administrative costs that they would incur when collecting the accounts receivables. These costs are reduced when the customers have a high likelihood of paying back. When the company deals with exporting, Factoring companies will also consider the number of countries and clients contracted. The more Accounts Receivables, the lower the fee the Factor will request. The formula they use is also a crucial matter to determine the fee.
Factoring companies may also charge you for their speed in collecting the invoices. You will pay a bit more if the Factoring companies manage to recover your receivables in a short period.
In order to establish what the real cost of factoring is, you should not only add the fees and the interest rates you will pay. The reason for this is that Factoring companies save you money in labor and administrative work, and they also provide you services as well.
About the Author:
Wade Henderson - very Professional - 15 yrs in the Business Finance Field - reputation for getting the deal done. IMMFinancial.com cash flow finance medical receivables
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