Factoring is a type of financial service in which a business sells its accounts receivables to a third party called factor. The factor is generally a finance company. Also known as factoring companies, they pay the business organizations the amount due on the account receivables at a discount even before they do the collection. Later this company collects the payments from the business’s customers.
You may explore the basics of factoring here.
To understand the concept of factoring, it is important to understand what are factoring companies. Let us understand more about these companies.
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What are Factoring Companies?
Factoring companies are the financing companies that act as the third party in the factoring process. They purchase the invoices of the business and provide them money for the unpaid invoices. They charge factoring fees or commission for their services. The services of these companies differ from each other. Some provide general factoring services while others provide their services to specialized sectors like medical, real estate, transportation, construction, etc.
Advantages of Using Factoring Company’s Services
There are many advantages for businesses to work with factoring companies. Few of them are as follows:
- protects the business against the loss due to bad debts.
- increases the liquidity flow of the organization.
- provides support to start-ups and small businesses.
- enables quick decision-making.
As there are many benefits of factoring services to the business, let us have a look at few of the top factoring companies around the world:
Top Factoring Companies
Factoring Companies in the USA
Top factoring cos. in the USA are:
- RTS Financial
- USA Factoring
- Riviera Finance
- American Receivable
Factoring Companies in the UK
Top factoring cos. in the UK are:
- Bibby Financial Services
- Hitachi Capital (UK) Plc
- Close Brothers Invoice Finance
- HSBC Invoice Finance (UK) Ltd
- Lloyds Commercial Finance
Factoring Companies in Canada
Top companies in Canada are:
- Merchant Lenders Canada
- Greenbox Capital
- TCI Business Capital
- Commercial Capital LLC Canada
- Express Business Funding
Factoring Companies in India
Top factoring cos. in India are:
- IFCI Factors Ltd.
- SBI Global
- Standard Chartered Band
- Canbank Factors Ltd.
- ECGC India Ltd.
Factoring companies have become a significant part of the business today. They save the business from the working capital crisis and helps in maintaining higher operational efficiency. The business should enter into factoring contracts after considering its requirements. Most of the factoring contracts are for 12 months. Going ahead the reliability of businesses on factoring companies will increase and more such companies shall flourish.1–3