Technology/Functionality
Answer
As with all financial services, some criteria do need to be met in order to ensure that the factoring contract will be beneficial and sustainable. Invoice factoring is a form of lending, and as such, you may need to provide collateral to guarantee repayment of a cash advance, if the debt cannot be collected on an invoice. However, this may only be required if you are trading with customers with a bad credit history and normally only with recourse factoring agreements (where any bad debt remains the responsibility of your business), so it is certainly not a guaranteed prerequisite. Make sure you check your offer terms and contract thoroughly for any collateral requirements.
An additional question: Respond to this Question
- Why turn to a factor rather than seek a bank loan?
- How does a factoring finance arrangement work?
- Who collects the debt due, the factor or my business?
- What's the difference between factoring with recourse and factoring without recourse?
- Does factoring require a minimum number of invoices?
- What does a factoring company do in the case of nonpayment?
- Do my customers know of the factor’s involvement?
- What are the requirements for invoice discounting?
- How quickly can I access cash for the invoices I sell to a factor?
- Who do I turn to if I have a dispute with my factoring company?
- I have overseas clients; can I factor international invoices?
- Is it easy to terminate a factoring arrangement?
- What regulations apply to factoring companies?
- What does working capital mean to your business?
- What is the difference between factoring and bill discounting?
- What is credit insurance?
- What is export factoring?
- What is the difference between invoice factoring and merchant cash advance?
- What is the difference between factoring and securitisation?