Factoring companies, especially those that have been present on the market for a long time, very large experience in collecting debts and are effective. We suggest how the services of factoring companies can help an entrepreneur in running a business.

Preservation of financial liquidity

One of the consequences of unreliability of our contractors may be the insolvency of our company. This is particularly frequent in the case of companies with a track record - those that have recently started operations and are investing heavily in growth, or those that are restructuring, and whose current operations require significant financial resources. Late payment by the contractual partner results not only in material damage, but also in the imposition of penalties in the event of failure to pay on time, as well as in a deterioration in the relationship with our creditors. All these issues can be absolutely crucial to our business.

Assistance in the recovery of debts

Factoring companies, especially those that have been present on the market for a long time, have extensive experience in collecting debts. Their effectiveness in this area is not surprising - firstly, they have had time to create appropriate procedures and, secondly, if they were not effective in this area, they would quickly disappear from the market. If we use recourse factoring and have a problem with the recovery of a liability, we should inform our factor as soon as possible. We can count on him to advise us on the effective collection of our debts and even to send his employees to do so, but the latter only applies to important customers and large debts.

Full factoring

The entities using factoring services also have the possibility to completely dispose of their liability towards the factor and transfer the receivables to the factor. This option is called full factoring (as opposed to the most popular form of this service, i.e. partial factoring, also called regression factoring). Full factoring is definitely more expensive, but if we are dealing with a contractor not fully trustworthy, then this option may be very convenient for us. However, this service is not available to everyone and, unlike factoring with recourse, we cannot count on financing immediately - the factor, before issuing a positive decision, must analyze the situation in terms of risk and profitability. However, if everything goes well when you sign the factoring agreement, you will get rid of the problem.

Skillful use of factoring can be extremely useful for an entrepreneur, especially in key moments for the company's development. Sometimes, before we take a case against a contractor to court, it is worth considering whether there is any other possibility left for us.

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