Accounts receivable can drain your liquidity very quickly. This is where factoring can help by converting accounts receivable from domestic and export business activities into free cash.
Whether the payment terms that you have agreed are too generous or customers are simply dragging their heels with payment: Having high accounts receivable can quickly lead to problems with liquidity and, in the worst-case scenario, to insolvency. Factoring prevents things from getting to this point.
Factoring involves you selling your accounts receivable from services or goods deliveries on an ongoing basis to a third party, the factor. This party pays off the debt amount immediately and assumes the full risk of default – even if the customer is unable to pay. The factor also performs all the administrative work involved in managing the accounts receivable, such as accounting, dunning and debt collection. The latter is especially useful for foreign receivables.
Does this sound like an appealing prospect? Well, there are even more compelling arguments to convince you. LBBW's factoring solutions are custom-tailored to your requirements. We are extremely familiar with our customers' requirements and design our products and services to suit. We also work closely with our partners, who have many years of expertise to boot.
LBBW's subsidiary SüdFactoring, which has been established on the market since 1968, offers a complete range of factoring services.
Factoring benefits at a glance:
- Money is made available quickly
- The risk of default is reduced, which improves planning reliability
- It has a positive effect on your balance-sheet structure, equity ratio and credit rating
Factoring protects your company from losses on receivables, generates greater financial independence and makes financial planning easier.
Reverse factoring is also known as supply chain finance (SCF for short). In contrast to traditional factoring, in SCF it is the buyer, not the supplier, who takes the initiative. Our experts are happy to provide you with further assistance in this specialized area as well.
Targeted receivables management abroad: Forfaiting
If you want to sell your export receivables, then forfaiting [external link to Forfaiting] is the option for you. It not only provides you with quick access to liquidity for international business transactions, but also releases you from debtor risk.