Description of the factoring service

Factoring is a flexible financial tool that combines a wide range of services, the combination of which will depend on the company's individual needs in order to ensure optimization of commercial exchanges and to increase benefits for both buyers and suppliers.

The inclusion of the Factor does not interfere with proper commercial relations but, on the contrary, makes the supplier's offer much more competitive, helping him to extend the payment terms or to increase the number of possible suppliers. By eliminating the negative effects of extended payment terms, Banca IFIS – due to an advance of up to 100% of the credit - helps the supplier to resolve its commitments more rapidly and, at the same time, provides an opportunity to negotiate discounts on purchases. Involving IFIS in the transactions can positively influence the position of suppliers, particularly with regard to their relations with large buyer companies, and that will also allow to regulate agreements with smaller ones.

Factoring fulfils three main functions:
  • the administration of credit: accounting, monitoring of positions, verification of the correctness of the accounts;
  • financing of activities: advances of funds in connection with invoices;
  • credit protection: transfer of the risk of insolvency to the factoring company.
The Factoring Agreement is undersigned by two or three parties involved in the whole transaction - the supplier and the factor - and covers the transfer of invoices issued from the supplier to the buyer. In some cases (indirect factoring), cooperation begins with the buyer of the goods or services, which needs more time to settle its debt. However, to transfer the invoices to the factor, an agreement with the supplier is required.

Who can benefit from the service

Factoring can be utilized by companies operating in the b2b sector which produce goods, conduct commercial transactions and offer services. The most significant benefits are for companies which:
  • operate in sectors where long payment terms are the norm;
  • have very brief payment terms imposed by their suppliers compared to those applied to buyers;
  • have variable seasonal sales trends;
  • are initiating new commercial relations;
  • are intensifying the volume of their activities and the level of turnover;
  • cooperate with foreign companies;
  • make investments;
  • want to improve their financial ratios and financial statements;
  • do not have access to other sources of financing due to their low level of creditworthiness.

The cost of the Factoring service

The costs of Banca IFIS are established on the basis of individual parameters that are presented by potential customers.