When discussing the invoice discounting with referral partners and potential customers, they often try to compare the value of money by debiting with the cost of capital on bank loans. This comparison is not easy to make because the processes are very different. Here is an excellent way to explain the difference.
Creating Relations for invoice factoring is a quick and straightforward process. Funding can be done within one week after receiving the application. Compare this with the lengthy and often complicated process of obtaining a bank loan. Even in the best of times, you must provide the bank with a lot of historical information, answer any questions, and wait a long time for the approval of the Credit Committee. In the current chaos in the credit markets, requirements have become more stringent and complex. Factoring offers instant cash flow after establishing relationships, transferring funds to your bank account within 24 hours of receipt of bills.
Many factoring companies offer additional services that are not provided by banks. For example, if you want to add new customer accounts, the factoring company will provide you with a free credit check. The collection can be carried out by the staff of the factoring company professionally and politely, which leads to a decrease in bad debts. Reports are transmitted on time and continuously, helping the client to monitor the debt closely.
All factoring agencies will send the amount of money to the invoice company. Not every billing company is the same, so some will offer more generous terms than others. Therefore, the more the factoring agency wants to provide, the more the company sells accounts, the better. Globalization agencies will charge a fee for their services for taking over. With that in mind, make sure you have prepared a shortlist of potential globalization companies that you think might be useful for your needs, and then compare the taxes they all charge. From there, you can make a more informed decision about which company offers the best value for money in general.
Bank loans often require personal guarantees from business owners, and most of the time they have to make other guarantees. Globalized companies only need first place in business accounts. No personal guarantees are required, and no other assets are required. This arrangement not only provides the client with the working capital he needs. The amount that can be calculated is limited to the receivables group.