Benefits of Factoring

Factoring have mutual benefits for both the Buyer and the Seller

For the buyer:

• Injection of WC to finance expansion.

• Additional WC finance aside to conventional bank.

• Suppliers can be paid promptly and so the buyer can doubly benefit from reducing costs by taking advantage of prompt payment discounts and improving his credit standing with suppliers.

• No loss of equity - the seller should not need to seek additional capital from outside shareholders and thereby lose some control of the company.

• No formal funding limit - the funding normally keeps pace with growth.

• It allows buyers a period of free credit to use the goods in the production of their own products and then to sell the goods to their own customers.

• Their own lines of bank credit are not used to fund the credit period.

• It is also administratively simpler and cheaper than the letter of credit.

For the seller:

• Accelerate WC = Accelerate company’s T/O = more profits.

• The seller does not have to wait until the end of the credit period (and often much longer) to receive his money. A substantial part of his A/R becomes active working capital                        

• Advantage with his buyers use open accounts.

• Efficient A/R ledger operation.

• Flexibility in use of funds.

Benefits of Factoring


Egyptian Laws

Factoring Types

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