Factoring is a financing which allows suppliers to obtain funds right after supplying goods to the customer and signing closing documents by assigning their receivable claims to the factor.

1. The Supplier and the Customer conclude supply contract on the terms of deferred payment
2. The Supplier execute contract and sign closing documents with the Customer
3. The Supplier receives payment from the Factor the day of signing closing documents
4. The Customer pays the Factor the amount for provided service/ supplied goods

• Filled questionnaire of the Factor
• Card of account 62 on the past half a year
• Scan of the contract, which requires factoring

The Supplier pays the fee.

Factoring through TEK-Torg is free of charge. All financial operations are conducted directly with the Factor. The cost of factoring through us or directly through the Factor doesn’t differ, and more often it’s more profitable due to discounts from ETP TEK-Torg.

Factoring is suited for companies working with deferred payment from customer. For example:

• companies, which need to promptly obtain financing to meet recurrent expenditure
• manufacturing companies, which have long production cycles and need liquidity to maintain working process
• wholesale and retail companies, which need financing for procurement and maintaining a warehouse without waiting payments from clients
• service organizations, which provide services and have long periods of payment from clients
• companies, which already have a loan burden but need additional financing

Both financing tools have their features and what is suitable for one company might be unfavorable for the other. That is why it's important to know, what terms better correspond your tasks.

Terms comparison

• Loan is a traditional financing tool providing opportunity to obtain a specific amount of funds on pre-negotiated period at a fixed interest.
• Factoring is a process of assigning the receivable claims to the specialized financial company. It allows business quickly obtain funds and improve liquidity. Factoring might include additional services such as management of receivable and legal support.

Benefits and drawbacks

• Liquidity and access to funds:
  Factoring doesn’t reduce liquidity of the company, since it allows to quickly obtain funds for the receivable. Moreover, it doesn't require a collateral what reduces risks for business. Loan most often requires targeted spending of funds, that limits free access to the funds.
• Additional services:
  As mentioned before, factoring also includes additional services, such as management of receivable and ability to insure risk of non-payment. It might significantly reduce total expenses on financial and risk management.

Conclusions

Ultimately, the choice between loan and factoring should be based on specific needs of the business and the current financial situation. If your company needs quick money to cover current expenses or to improve liquidity, factoring might be more favorable solution. However, if you need long-term financing for major projects, then a loan might be more suitable option.

Thus, in order to make informed decision, it’s necessary to analyze in detail the specific offers for both loans and factoring, as well as take into account additional conditions and services that can significantly affect the overall benefit of the chosen financing instrument.

If you have any questions left about factoring, please contact for consult to the specialists of TEK-Torg.

TEK-Torg experts will collect the best terms and suitable Factor for the Customer, they’ll answer all the questions from Supplier and they’ll help to collect all the necessary documents.

Factoring services fee is set in annual percentage from the amount of financing and usage period, calculated individually for each Supplier.