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FAQ Factoring

You questions, we answers...the most frequently asked questions about factoring

What is Factoring?

Factoring is a modern financial service that serves to finance sales. A factor buys monetary receivables from goods deliveries and/or services of a factoring customer against the customer (debtor) within the scope of fixed debtor limits. In return for the assignment of the receivables, the factor immediately makes payments to the factoring customer which are based on the amount of the receivables. Factoring essentially has three functions: Liquidity, default protection and service.

What distinguishes factoring from debt collection?

In principle, debt collection and factoring is the collection of a claim against money. Factoring is an alternative form of financing which is mainly used by medium-sized companies. With the continuous purchase of a large number of receivables, companies create immediate liquidity. A debt collection company is commissioned when receivables are due and only takes effect after the payment terms have expired. In debt collection, only individual receivables are transferred for collection.

Is factoring a short-term or long-term financing?

Factoring is a short-term financing. With the sale of outstanding receivables from the delivery of goods or services, the customer receives liquid funds from the factor. This ensures short-term financing of the customer from working capital.

What is the difference between forfaiting and factoring?

Both types of financing are receivables sales; the most important differences are as follows:

Forfaiting usually involves the purchase of large individual receivables and is used in capital-intensive transactions. These are long-term receivables with maturities of up to ten years.

Factoring is the continuous purchase of a large number of receivables with different maturities with a rather lower amount and with receivables maturities of up to 120 days.

Factoring or current account credit?

The current account credit is the most frequently used short-term financing. Banks require high security requirements for the overdraft facility; the required credit line is often less than the required financing requirement. With regular use, the costs for a current account credit are higher than for other types of financing. The special feature of factoring is the quick availability of the invoice amounts and the associated possibility to negotiate discounts and rebates. These savings can already compensate for the factoring fee.

What are the advantages of factoring?

Factoring is a financing alternative to classic bank financing with additional services. By selling your outstanding receivables, you receive immediate liquidity and are protected against bad debt losses. If you wish, we can take over debtor management, thus relieving your administration and saving you time and money.

Factoring-Advantages 

Which companies use factoring?

Factoring is mainly used by medium-sized companies. Factoring is also a popular financing instrument for smaller companies. There are also factoring providers who specialise in freelancers, self-employed persons, sole traders, craftsmen (VOB), start-ups, tax consultants, doctors, dentists and dental laboratories.

Factoring is particularly used by companies:

    • strong growth
    • rapidly increasing or fluctuating turnover
    • high capital commitment in the receivables
    • cannot take advantage of purchasing advantages due to low liquidity
    • who want to insure themselves against bad debt losses
    • who want to reduce their costs through professional accounts receivable management

Which sectors are suitable for factoring and which are not?

Factoring is suitable for many sectors, in particular for companies in production, wholesale and services. Factoring is not suitable for companies that provide their services in sub-sections, such as in the construction industry, or in project business.

What requirements must I fulfil in order to be able to use factoring?

The following applies to all companies: the service on which the claim is based must be free of objections, complete and free of third-party rights. The other requirements are,

  • Receivables terms between 14 and 90 days
  • Receivables from commercial customers (B2B)
  • positive credit assessment of the factoring customer and his debtors

Why should I choose factoring with PMF Factoring GmbH?

We are a medium-sized and owner-managed company and follow a service-oriented approach. We attach great importance to a high service quality and to the satisfaction of our customers. Our service-oriented approach includes professional and active customer care that is competent, consulting-oriented, fast and transparent.

Our service quality, a deep understanding of consulting and financing for medium-sized companies and many years of cooperation with our customers speak for us and make us a trustworthy and competent factoring provider.

Advantages of PMF Factoring GmbH

What services does PMF Factoring offer me?

PMF Factoring GmbH offers you further services in addition to the financing of your outstanding receivables. We support our customers quickly and flexibly in their day-to-day business with all inquiries and concerns and always inform them about the current status of debtor management.

Our services

What distinguishes a good factoring provider?

Member of a factoring association

Supervision by the Federal Financial Supervisory Authority (BaFin) and Deutsche Bundesbank

Provider of full-service factoring (debtor management including dunning and collection)

Many years of experience in the market

transparency

Individual, tailor-made factoring offers

Services, personal contacts

Modern IT platform

How quickly can I use factoring in my company?

Thanks to our short decision-making paths, we can decide on your financing request within a short period of time. After signing the contract and setting up your customer account, you can start factoring after just a few weeks.

Can I bring in an existing credit insurance?

You can retain your existing credit insurance, which is included in the factoring contract. In contrast to credit insurance, the factoring contract protects you 100% against bad debts.

How fast is the payment made?

Payment is usually made on the day the invoice is submitted.

Will the payment terms for my customers change?

The payment terms of your customers do not change. We adhere to the payment terms you set us and your customers.

Who issues the invoices to my customers?

You continue to write your invoices and forward them electronically to us.

What does your dunning process look like?

As part of our full-service factoring, we take over the dunning and collection process for you. In consultation with you, we dun overdue receivables commercially. After an unsuccessful dunning procedure and after all dunning deadlines have expired, we initiate a collection procedure. In full-service factoring, you are protected against payment defaults and the invoice amount is paid out.

Would you like to know whether factoring is also suitable for your company?
Please feel free to contact us at any time for a non-binding discussion.
You can reach us at the telephone number 040 607 749 40 or by email: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Glossary Factoring

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