Invoice factoring 2 – Pro et contra

So, what are the pros and cons of invoice factoring. The pros of invoice factoring are that the money can be made available much faster than a bank loan can be obtained; usually within 48 hours. This means that businesses may take advantage of discounts offered by suppliers or they can expand and take on new clients thereby increasing profits.



Further, in most cases, invoice factoring companies do not require any further security therefore the business owner need not put up his or her own assets as security. In some cases, where a business is not able to obtain a loan from a bank, it may still be able to sell its receivables invoice to an invoice factoring company. This is because banks are interested in different things than invoice factoring companies. Banks care about the credit worthiness of the business and the security the business owner can put up. Invoice factoring companies, on the other hand, care only about the creditworthiness of the debtors. The cons of invoice factoring are that the costs are higher than a traditional bank loan. Also, the customer or debtor may not be comfortable with the idea of paying a company from which they have not received the goods or services. There was once a stigma attached to receivables invoice factoring however the use of invoice factoring has increased and, with it, the stigma has decreased.



The information about factoring and all else on this website in not intended as any form of advice and should not be understood in that way. If assured correctness in information is sought it should be gathered from other sources such as e.g. professional consultants.