What is Factoring?

Factoring is a financing method in which a business sells its receivables to a factor in order to get immediate liquidity. Factoring also offers sales ledger administration and protection against bad debts.

How can receivables funding help your business?

It will help your business by providing an immediate source of cash flow for your company. You can use this cash to provide working capital, meet payroll, pay taxes, replenish inventory, increase advertising, and more.

How is receivables funding from LCI different from bank’s financing?

Factoring requires specialized knowledge and approach to risk management that is different from other traditional banking products. The factor focuses on the payment risk of the buyer instead of studying the balance sheet of the company itself and the company’s availability of collateral. The factor will continuously monitor the balance sheets of the company and can provide other receivables management services as well. The monitoring may also enable access to increased funding that is limited by banks due to security issues and the registration of the companies loans in the central credit register.

The factor can also offer a Full Factoring service that doesn’t only consist of immediate liquidity but also provides security against bad debts.

What happens if your customer does not pay the invoice?

This depends on whether your company entered into a non-recourse or recourse agreement with the factor. In a non-recourse agreement, we will take on our own your customers' insolvencies or payment default. In a recourse agreement, your company will have to reimburse us the amount.