Facts about factoring
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"To release financial resources during periods of growth, 100% professional credit control, relieving the administrative load - security."
Quotation from customer analysis.
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Most businesses can make use of factoring's benefits. Factoring is now used widely, by business large and small in almost all sectors of industry. In brief, the advantages are as follows:
- Simpler and more efficient administration - for export, too
- Strengthened solvency, shorter credit periods and faster financing
- Protection against loss from debtors or exchange fluctuation
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The greatest benefits can be gained from outsourcing the whole credit control operation. By placing the workload and responsibility outside the business, this promotes security and allows the company to concentrate on its primary business area. |
What is factoring?
Factoring is first and foremost a service and financing tool. Thousands of businesses in Denmark and abroad have some involvement in factoring every day, either as the client of a factoring company or as a debtor, making payments through a factoring company. The main elements in factoring are credit management, financing and risk reduction.
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How factoring works
In principle, factoring is pretty simple: a supplier of goods or services transfers its outstanding accounts to Midt Factoring, and debtors are informed that payment must be made to Midt Factoring. We subsequently take on responsibility for managing that business’s debtor accounts. In other words, we record invoices, credit notes and payments, pursue late payers, handle any default actions etc.
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. |
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