Factoring

Factoring is a set of services including financing, administration of accounts receivable, and reducing the related risks.

  • Factoring is an effective method to finance working capital of a company.
  • Factoring that includes insurance of your buyers‘ credit risk ensures stable and reliable cash flows to your business even if the buyer encounters difficulties in payment.
  • Administration of accounts receivable enables the seller to save time that would be spent for the monitoring and controlling the debts.

Factoring products:

  • Types of factoring according to seller‘s liability

  • Types of factoring according to place of registration

Usual scheme of factoring

  1. The seller sells goods or services to the buyer
  2. A copy of a invoice is submitted to Swedbank lizingas, UAB
  3. Swedbank lizingas, UAB makes an advance payment (70% to 90%) to the seller under the invoices accepted
  4. Swedbank lizingas, UAB receives a 100% payment from buyers under the invoices
  5. Swedbank lizingas, UAB pays the reserved money (30% to 10%) to the seller

Advantages of factoring

Benefits of factoring for the seller:

  • Raising financing without a pledge/mortgage of property;
  • Facilitates planning of cash flows;
  • Enables the seller to apply longer payment terms, which means that more buyers are attracted and the seller gains a better competitive position in the market;
  • The seller may use the working capital received for other business purposes, e.g. to use discounts offered by suppliers for advance payment;
  • Enables the seller to collect money more efficiently, which reduces doubtful debts and provides protection against the buyer‘s solvency risks.

Benefits of factoring for the buyer:

  • Obtaining longer payment terms;
  • Attracting new suppliers;
  • Increased purchasing power without using other financing sources.

 

  • More about the factoring service