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What types of factoring are available?
There are many different variants on the factoring market – each with its own special features. Full-service factoring is particularly popular with small and medium-sized companies because it not only offers fast liquidity, but also includes bad debt protection and numerous services such as credit checks, dunning and debtor management. But which type of factoring is best suited to your company? We provide an overview – and help you find the right solution.
The most important types of factoring at a glance
In addition to full service factoring, there are also other types of factoring such as inhouse factoring, reverse factoring or section factoring, for example. All types of factoring – with the exception of reverse factoring – can theoretically be offered in an open and a silent procedure. However, the silent procedure is not offered to all companies. In most cases, factoring providers require a certain size and credit rating.
With A.B.S. Factoring, you have the full-service option for fast and flexible liquidity with full default protection and numerous services such as debtor management including dunning.
With A.B.S. Factoring, you sell your outstanding receivables to A.B.S. Factoring AG and receive immediate liquidity amounting to 90 per cent of the receivable amount within 24 hours. The remaining 10 per cent remains with A.B.S. Factoring as a security deposit until your customers have settled their receivables with A.B.S. Factoring.
With the sale of the receivables, A.B.S. Factoring also provides you with full bad debt protection. This gives you financial security that you would not get with other financing solutions.
What’s more, with A.B.S. you always benefit from full service. This means that A.B.S. takes care of the entire receivables management for you, from checking creditworthiness and monitoring payments to issuing reminders and, if necessary, initiating debt collection proceedings. This means that you can usually dispense with your own accounts receivable accounting and save a lot of money and resources that you can invest in your company’s growth instead.
You can also generate liquidity from your receivables with inhouse factoring. However, you then forego the numerous additional services of full-service factoring. This is because with in-house factoring, you also sell your receivables to a factoring company and receive liquidity within 48 hours. Depending on the provider, this is between 80 and 90 per cent of your receivables amount. However, the entire accounts receivable management remains in your own company accounting department, whereas with A.B.S. Factoring it is carried out by our experts in a highly professional manner and with particular sensitivity and expertise.
In-house factoring is usually only offered as dormant factoring – although open in-house factoring is also theoretically possible. The sale of receivables is not displayed in the silent factoring variant and is therefore not recognisable for your customers. However, this waiver is associated with considerable additional expense. To ensure that your factoring provider has an overview of the receivables still due, you usually have to assign a company account to them in advance, which they can manage. The receivables are to be transferred to this account by the customer. However, you must continue to issue the invoices and reminders yourself. Most in-house factoring providers will only provide you with support if debt collection proceedings are initiated.
Please note: In-house factoring is currently only offered by the A.B.S. Group in Austria. In Germany, we deliberately focus on our full-service factoring to offer our customers maximum relief and security.
With partial factoring, you do not have to assign all receivables in your portfolio to the factoring provider. Instead, you can select individual customers whose invoices you would like to assign – or, conversely, exclude customers from the sale of receivables for whom factoring is not particularly worthwhile. This is often the case, for example, with cash discount payers or customers with very low turnover.
With A.B.S. Factoring AG’s cut-out factoring, you can therefore improve your liquidity quickly, cheaply and to the required extent. Simply sell only the receivables that you need for your cash flow. For the receivables that you assign to A.B.S. Factoring, you receive the usual full service scope.
Reverse factoring is a form of purchase financing. Your goods purchases can be pre-financed by a reverse factoring provider. With this pre-financing, you can bridge liquidity bottlenecks or seasonal peaks and have the liquidity you need to purchase goods, accept new orders and thus remain competitive.
However, classic reverse factoring is not very flexible due to the framework agreement that has to be concluded between you, your supplier and the factoring provider, and its implementation – especially the integration – often involves a high level of administrative effort. For example, when using reverse factoring, you have to process all invoices via the factoring service provider. In addition, reverse factoring also requires a long integration time, as a corresponding reverse factoring agreement must be concluded in advance with all eligible suppliers.
quickpaid is therefore a much more flexible form of purchase financing that can be used quickpaid. quickpaid is an innovative variant of reverse factoring developed by A.B.S. and can be processed quickly and online. All you need to do is register on the quickpaid portal – after a brief credit check, you will then be offered a corresponding financing limit. Within this credit limit, you can upload any number of invoices from your suppliers. A.B.S. then contacts your suppliers directly and offers them direct payment as part of an assignment of receivables.
The attractive add-on: As an early payer, you have the option of drawing a discount if necessary! The income from this is freely available to you and can, for example, reduce your financing costs. With quickpaid, you can determine your own payment term vis-à-vis A.B.S. Depending on your capital requirements, this can be between 60 and 120 days in addition to the original payment term of the invoice. In the best case scenario, this allows you to bridge the time your customers need to pay for your delivered goods.
There is no obligation to tender with quickpaid. You are free to decide within your financing framework how many supplier invoices A.B.S. Factoring AG should pre-finance for you.
Factoring also distinguishes between genuine and non-genuine factoring. With A.B.S. Factoring AG, you only get genuine factoring. This is because only with genuine factoring do you also receive bad debt protection and are therefore financially secure. With non-genuine factoring, on the other hand, the factoring service provider in question does not offer any del credere protection. If your customers do not pay the invoices, this can lead to considerable losses and capital losses for you in the worst case.
Factoring is as versatile as our customers' requirements - from full service to export: there is a suitable solution for every situation.
Marc Meier
Managing Director A.B.S. Factoring AG
For whom is factoring particularly useful?
In addition to the types of factoring already mentioned, a distinction can also be made between other factoring variants. The corresponding target group is the distinguishing feature.
Start-ups or newly founded companies face particular challenges, especially in the early days. Many investments usually have to be made and liquidity must be guaranteed from day one.
A.B.S. therefore offers suitable factoring financing solutions for start-ups and young companies. In a company phase in which your own creditworthiness is still being developed and other financing instruments are therefore often difficult to realise, factoring can already be effective – provided your customer structure is convincing. If your product is convincing, we will work with you to achieve growth.
You receive the full range of services from A.B.S. Factoring, customised to your company and your corresponding goals and challenges. By selling your receivables to A.B.S., you not only generate the necessary capital for your growth, but you are also protected against bad debt losses and receive comprehensive support with your receivables management, including dunning.
With A.B.S., you have a professional financing expert at your side to support you in your growth.
The export business and the development of foreign markets present their very own challenges – such as language barriers, greater currency and default risks and different legal systems. But with export factoring from A.B.S., you can also successfully overcome these hurdles.
With export factoring from A.B.S., you not only receive the liquidity you need to successfully bridge the often long payment terms, you also enjoy full bad debt protection and many attractive services. Regardless of whether you need support with risk assessment or debt collection.
Thanks to A.B.S.’s many foreign branches and well-developed partner network, you will also receive the help you need for successful growth in export transactions.
Particularly in the event of current or impending insolvency, it is necessary to have appropriate financial resources available in order to maintain substance, find investors and continue the business. Access to bank loans is often blocked in the event of such financial difficulties, which is why alternative forms of financing are of great importance, especially in such a company phase. A.B.S. helps you out of the crisis with individualised insolvency factoring solutions. You enjoy all the benefits of full-service factoring as well as full bad debt protection.
By assigning your receivables to A.B.S., you generate the liquidity you need to continue running your business even in insolvency. In addition, you are also significantly relieved of the burden of receivables management, including dunning. So nothing stands in the way of your second chance.
In times of constant change, companies are constantly faced with the decision to set a new course. In order for your company to be able to adapt to changing circumstances in this situation, it must also be able to act financially. This is where turnaround factoring from A.B.S. Factoring with all its full-service benefits can become one of the most important instruments for consolidation.
Because a successful turnaround requires more than just liquidity. Our experts will insure you against payment defaults, take over your complete debtor management and also ensure that your customers maintain payment discipline. If you need advice or legal representation, you can rely on A.B.S.’s broad network of partners. With A.B.S. AG’s high degree of flexibility, entrepreneurial thinking and quick ability to act, you are well positioned for the future.
Is factoring right for your company?
If you are wondering which type of factoring is right for you, simply start with our free factoring checklist.
With just a few clicks, you will receive a well-founded initial assessment of whether factoring can increase your liquidity, security and efficiency.
