Il Factoring | Servizi Offerti

Factoring is a contract whereby a business (known as the "assignor") undertakes to assign for consideration all or part of its receivables to another professional subject (known as the "Factor"), which in turn undertakes to provide a series of services ranging from accounting to management to the collection of all or part of the latter’s receivables in relation to its business, up to guaranteeing any debtor default, or financing the assigning business, normally through advance payment on the assigned receivables.

The assignment of receivables is not the ultimate goal of the agreement, but the instrument through which it is possible for the Factor to provide services (financial and non-financial).

There are three players in a Factoring transaction: the assigning client, to which the receivables are due, the Factor (assignee) and the debtor (assigned).

Service description

Factoring deals with the assignment of trade receivables. To be assignable, a trade receivable must be:

Certain: its existence is not in dispute
Liquid: have a specific amount
Payable: no longer subject to any condition

Factoring can be seen as a technique or tool for the management of a company’s working capital, based on the use of three basic components:

Financial
Insurance
Management

which can be appropriately set up based on the specific needs and characteristics of both the ASSIGNORS and the DEBTORS.

Assigning Company

Assigned Debtor Clients

Financial component

Assigning Company

Makes it possible to transform trade receivables into liquid resources, without directly affecting creditworthiness, but instead taking advantage of client solvency.

Assigned Debtor Clients

If the supplier has the possibility of making its receivables liquid, the "payment term" variable becomes relatively less strategic, opening up spaces for commercial negotiation and harmonisation with the debtor's cash flows. In any case, this possibility may be offered by the direct relationship with the Factor, agreeing to grant additional payment extensions.

Management component

Assigning Company

The company replaces all of its clients with a single point of contact, recovers human resources to be allocated to more strategic tasks and benefits from the economies of scale deriving from the activity of an operator that centralises the management of large volumes of receivables.

Assigned Debtor Clients

For the debtor, too, there are real advantages in replacing multiple suppliers with a single point of contact for payments, in terms of both internal and external costs.

Insurance component

Assigning Company

Possibility to predetermine the cost associated with default risk and reduce the cost of credit risk assessment.

Assigned Debtor Clients

From the debtor's point of view, the Factor's non-recourse intervention on its trade payables represents a substantially free line of credit, in addition to those granted by the banking system.