Frequently Asked Questions
What is factoring?
Factoring is a service and financing tool, of which the main elements are credit management, financing and risk reduction. This means, for example, that Midt Factoring might deal with a company’s debtor accounts, pursue late payers, rate customers’ creditworthiness, cover the company against exchange risks and handle any default actions. If a business wishes to employ debtor financing, typically 80% of the invoice amount is paid out to the client on delivery of the goods. The remainder is paid out once Midt Factoring has received the payment from the debtor. The business is free to concentrate on its core competences and customer care. So a steadily-growing number of businesses are now using factoring.
|
Who can use factoring?
Factoring is primarily for businesses selling business-to-business to a value of more than 5 million Danish Kroner per year. If one or more of the conditions below apply to you, it is very likely that factoring would be a sensible option for your business:
- Large number of clients and invoices
- Long credit periods
- Large stocks
- Active on export markets
- Uncertain sector
- Rapid growth in business
- Want to outsource administrative routines
|
Is factoring expensive?
Our clients have confirmed that they gain financially by working with Midt Factoring. Cash discounts, saved interest, improvement in the flow of payments from debtors and fewer actual losses on debtor accounts are among the arguments for a modern factoring solution. The price for our services depends on the number of vouchers and customers, risks, credit periods, payment terms, procedures for pursuing late payers, borrowing percentage etc.
|
Is factoring complicated?
It goes without saying that our factoring service removes an administrative burden from the business. Once an invoice has been sent out, we take care of the rest. You can also use MF Online to make enquiries and retrieve the information you want, and all data is transferred to and from Midt Factoring electronically.
|
Doesn’t the business lose touch with its debtors if it outsources its credit control?
No, but the customer relationship is not disrupted by payment procedures and negotiations over credit periods. It’s Midt Factoring’s business to get customer relations working optimally, and our regular correspondence keeps our clients up to date with regard to their debtors. In addition, the Internet allows our clients to update their information with regard to their debtors via MF Online.
|
Is factoring for businesses in financial distress?
Use of factoring has become much more widespread in Danish industry in recent years, with factoring now being used by both large and small businesses, and the vast majority of them are sound, well-run businesses. Businesses have begun to regard factoring as a proactive financing option, allowing trading freedom in financial terms and flexible access to available funds. So we can also see that the market for factoring services is continuing to grow.
|
|
|