Factoring Financing and Its Advantages

Factoring is the provision of financing and collection services in return for the transfer of forward receivables based on invoices or documents replacing invoices, arising from the sale of all kinds of goods and services, to the factoring institution.

Within the scope of factoring, companies benefit from financing (cash management) and collection management services, depending on the service they have chosen. The benefit obtained from factoring increases in parallel with the selected service(s).

Advantages of Factoring

• Since the financing service provided by factoring is based on the assignment of trade receivables, it is fast and solution-oriented compared to bank loans.
• Factoring, with its cash management service, converts deferred receivables into cash, ensures that raw materials are purchased in advance and the costs that will arise from production disruptions are reduced. While increasing production efficiency, business volume and profitability, it helps to reduce the need for external resources.
• Receivable management services offered within the framework of factoring increase the competitiveness of enterprises with the maturity advantage it offers, and support the growth of market share and the development of quality standards.
• Cash management ensures that cash flow plans are more organized and realistic.
• Thanks to reliable intelligence, the latest information about the buyer's situation and activity in the market is reached and collection problems that may occur in the future are prevented. In summary, factoring supports an effective and realistic risk management.

How Does Factoring Work?

The factoring cycle is briefly summarized below.

1. The customer (the company that makes the sale) sells the goods. Cuts the invoice and forwards it to the buyer. Thus, the debt is born.
   
2. The customer reaches Lider Factoring.
   
3. The customer sends the invoice and copies of the check/notes, if any, and contact information to Lider Factoring.
   
4. After the customer's request reaches Lider Factoring, it is examined as soon as possible and the result is reported to the customer.
   
5. The check/note and the documents to be delivered regarding the receivable are delivered to the nearest Lider Factoring branch or contracted bank branches.
   
6. The prepayment is instantly transferred to the customer's bank account.

In Which Transactions Factoring Cannot Be Applied?

factoring;

- non-trade receivables

- personal loan transactions (such as cash, consumer, automobile, housing loans)

- non-traders

not applicable.

Who Can Benefit From Factoring?

All businesses that produce and sell goods and services, and briefly trade on a term basis, can benefit from factoring services. Undue, invoiced receivables arising from sales of goods and services based on commercial activities can be converted into cash by factoring.