financing and administering the receivables assigned to the factor. That means, the Factoree (the client that uses factoring)
is being paid the amounts due in the moment of shipping the goods to the contractor. Payment of the due amount is realised
within two stages, the first one - at the day Factoree sends the copies of the invoices and the collection batch acknowledgement to the factor - the advance (ca. 80% of the invoices' face value) and the second one - the yet unpaid balance immediately after the contractor settles the payment (transfers the due funds to Factor). In case the contractor is late with the payment, the Factoree gets the all means of Factor's support to recover the debt.
The factoring facility may be utilised both in the domestic and international trades. Some forms of the service protect the Factoree against the non-payment or contractor's insolvency risk, see recourse vs non-recourse factoring.
Factoring is a dedicated facility for the businesses:
- trading on open account terms,
- shortage of funds make them to look for external sources to finance the day-to-day business,
- realising risk potential risk of contractors' non-payment and/or insolvency risk,
- encountering increasing number of overdue contractors' payment,
- looking for alternative financial instruments.
Receivables subjected to factoring shall be:
- outstanding, indisputable and unmatured,
- of domestic or foreign trades,
- of payment term that does not exceed 120 days,
- actually substantiated.
FACTORING = FUNDSThe Factoree gets the permanent access to funds, just as the trade is continued. The funding level is directly related to the current sales volume. The cash received far earlier than due date improves the company's liquidity a lot.
FAKTORING = RECEIVABLES' SAFETYIt does no matter what form of factoring the Factoree utilises, the safety of trades improves. Once factoring is provided, the contractors pay the debts better. Factoring disciplines the contractors, that's true. What more, some forms of factoring assumes (partly or in whole) the risk of contractors' insolvency onto Factor. Factoree shan't afraid of bankruptcy or lack of the payment from the contractor then.
FAKTORING = INFORMATIONThe Factoree gets on-line access to data stored in the Pekao Faktoring IT system 24/7. The information and reports present the current state of settlements, accounts' balances and delays in the payment. Factoree is able to control the amount due paid/unpaid and manage the finances efficiently.
FAKTORING = LOWERING THE PRIME COSTSManagement of the accounts receivable is shifted on the factor. This is Pekao Faktoring that collects the contractors' payment, sends the necessary reminders, issues the interest notes out as well as performs the dunning actions. Such the Pekao Factoring operations reduces the Factoree's service charges a lot and frees time to do the core business.