Factoring is a simple and convenient way for companies to consistently receive money and not worry about payments, especially for small and medium-sized businesses. Instead of waiting for clients to pay, a company can approach the bank, which will pay the necessary portion of the supplier's receivables, while the customer will settle the debt with the bank within the agreed-upon time frame. This helps improve cash flow and avoid issues with a lack of funds.

How Factoring Works

The business submits an application to the bank and provides information about its customers. The bank checks creditworthiness and evaluates the accounts receivable. If the application is approved, the parties sign a contract, after which the bank transfers the funds. The bank then assumes responsibility for collecting payments from the company's buyers.

Who needs Factoring

Factoring is useful when a business doesn't want to wait long for payments from its clients, or when the company’s operations involve long payment delays or a large amount of accounts receivable from customers.

It helps avoid cash flow problems (cash gaps) and allows the business to operate more confidently, knowing that the funds will arrive on time. Upon approval, the business receives money almost immediately and doesn’t need to worry about payments. This speeds up cash flow and, at best, accelerates the company’s growth by improving money turnover.

What If There Is a Loan?

Having other loans does not prevent a business from getting factoring, though the bank will consider the overall debt burden of the company. This helps determine the amount of financing, which can be 70-90% of the total accounts receivable.

To Apply or Not to Apply

Factoring has been gaining popularity recently, helping businesses scale more easily and quickly without wasting resources on payment delays, waiting for settlements, dealing with documents, or handling unpaid invoices. The product has been actively and confidently integrated into business processes lately.

It is especially beneficial for small and medium-sized businesses. So, if you have a large amount of customer debt or a long transaction cycle, we suggest considering factoring as an effective financial tool.

Key Financing Terms

The client must have a bank account in one of our branches;

Contracts confirming accounts receivable must be provided;

Factoring amount: starting from 50 million sum;

Factoring term: up to 180 days;

Discount rate/allowances: negotiable with the client;

No overdue debts.