Financing of
ambitions and sales growth

Factoring

To do business quickly and seize opportunities, you need to have adequate liquidity. Many companies rely on external financiers for sufficient funding. There are various forms of working capital financing. Factoring is a particularly suitable alternative to traditional financing. Below, we tell you what working capital financing is, what types there are and explain factoring in more detail.

What is working capital?

Working capital is the funds you can safely spend. Resources that you can use to grow your business. For example, by bringing in a big customer, financing a new project or tapping into a new region, for example. Working capital is often explained as current assets minus current liabilities. Working capital financing aims to improve your working capital.

What forms of working capital financing are there?

Traditionally, as a company, you went to the bank for working capital financing. You were limited in your options and paid heavily for it. Fortunately, today there are many forms of working capital financing on the market that offer you, as a business, much more flexibility. You can think of, among others:

  • Current account credit (red standing facility)
  • Factoring (debtor-based financing)
  • Purchase financing (purchase value of goods is partially or fully pre-financed)
  • Stock financing (current stock is financed between 50 and 70%)
  • Reversed Factoring, also known as Supply Chain Finance (financing receivables from the buyer)

Working capital can be calculated in two ways: your gross and your net working capital. Read here: blog to be written how to do this.

Factoring enables you to realise your ambitions and get further sales growth financed effortlessly. Factoring is a particularly suitable alternative for traditional finance.

The meaning of factoring is a form of debtor financing. An entrepreneur pledges or assigns (= sells) his invoices and often also transfers the debtor risk to a specialised company, the factoring company. In exchange for a fee to this company, the entrepreneur receives his money directly.

Our newsletter articles on the topic of factoring can be found here.

What are the benefits of factoring?

  • Higher financing possible > factoring companies make funds available that banks do not venture (up to 95% of the receivables portfolio)
  • Factoring is an excellent alternative to traditional bank financing whose options are increasingly limited
  • You will have your money within 24 hours of invoicing your customer
  • It is a more flexible financing than traditional bank financing (peak periods, seasonality)
  • By shortening balance sheets, factoring offers an opportunity to improve financial ratios related to solvency and liquidity
  • Expertise from factoring company regarding potential debtors (payment terms, delivery and payment conditions, etc.)

Below, we have set out the factoring process in a diagram

Added value Xolv Finance

We have years of experience and broad expertise in working capital financing. This ensures that we are able to carefully set up, implement and monitor this form of financing together with you. Additional benefits include:

  • We are 100% (bank) independent and have very good contacts with all leading parties in the market
  • Not only focus on interest rates, but also on ensuring the most independent position possible without sacrificing too much collateral. With this, the best possible factoring deal.
  • Together with the client, we write a concise funding application (more likely to succeed).

In short: for tailor-made financing and maximising your working capital funding, you have come to the right place!

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