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Factoring
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In a Factoring transaction, IDC Financial buys certain accounts receivable from your business at a discount to provide you with immediate capital to operate the business, pay suppliers and grow. When Factoring, IDC Financial places the emphasis on the value of your receivables (essentially a financial asset), not not necessarily your firm’s credit worthiness. Factoring is not a loan, it is the purchase of a financial asset (the receivable). IDC Financial waits to get paid, while you get immediate use of the funds. |
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Factoring is a flexible form of finance, which advances money to a company as and when it issues new invoices. Factoring can bridge the gap between raising an invoice and getting that invoice paid. Factoring provides the cash flow necessary for working capital and growth |
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Factoring (the leveraging of your accounts receivable) provides fast prepayment against your invoices. Much like suppliers who offer discounts for early payment, factoring provides you early receipt of payment for your invoices at a similar discount. Taking advantage of your suppliers’ early payment discounts can help offset the cost of factoring. |
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Factoring differs from a bank loan in three main ways. First the emphasis is on the quality of the receivables (essentially a financial asset), not your firm’s credit worthiness. Secondly, factoring is not a loan – it is the purchase of a financial asset (the receivable). Finally, a bank loan involves two parties whereas factoring involves three. |
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