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ADVANTAGES OF FACTORING:
- Companies that assign the risk
of any non-collection to the factor
can expand their domestic and
international markets.
- Companies reduce their cost of
production. It provides opportunity
for higher profits.
- Capital stock of the company
increases. Balance becomes more
liquid.
- The seller’s power of
competition increases as it assumes
due date for the buyers.
- As the pre-payment in export
paid by the factor is in foreign
currency, foreign exchange file is
closed and application of VAT is
made at once.
- Buyers located in foreign
countries can be saved from
acquiring letter of credits.
- Sales with open account become
easier and more secure.
- actoring system which is
different from bank credits causes a
movement in the assets section of
the balance sheet. Balance becomes
more liquid and the credibility of
the company increases.
- The most important benefits of
the factoring services for your
company is that accounting
activities for your credited sales
are undertaken by the factoring
services.
- Factoring can also provide
the opportunity of an advance
professional investigation and
evaluation in the determination of
persons or companies to be involved
in credited sales.
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