Secure financing right from the start
Factoring for
Start-ups
Especially in the start-up phase, many start-ups quickly reach their financial limits. Ongoing costs come up against long payment terms – and traditional bank loans often fail due to a lack of collateral, a short company history or low reserves. No wonder that founders are looking for flexible alternatives to bank loans. Factoring is one of these solutions – direct, uncomplicated and growth-orientated.
The idea is there, the business model is convincing - but the liquidity is missing?
Even if initial start-up capital is available, this alone is not enough: liquidity must be permanently secured from the outset in order to keep business operations stable.
Because as soon as the so-called working capital slips into the red, liquidity bottlenecks quickly threaten the existence of the company – even with a good business model and growing demand.
With factoring for start-ups from A.B.S., you receive quick and uncomplicated financial resources to cover running costs, make investments and realise growth steps securely – without a bank loan or long review processes.
Operating costs as a
Hindrance to growth for start-ups
Financing is not the only hurdle for start-ups – the ongoing operating costs can also quickly become a problem. Because even if your products or services sell well, that doesn’t mean that the money will arrive in your account on time.
The reality for many start-ups: Invoices are paid late, while salaries, rent or supplier invoices are due immediately. Without sufficient liquidity, young companies quickly run into a dangerous bottleneck. The classic solution: A short-term bank loan or an extended overdraft facility is often used – but these options are usually expensive, limited and difficult to access. Companies with low margins in particular lose a significant portion of their profits as a result – and run the risk of no longer being able to finance growth.
Factoring for start-ups offers a flexible, bank-independent solution – exactly when you need it. Instead of waiting for incoming payments or getting into expensive debt, you sell your outstanding invoices and receive the money within 24 hours. This secures your liquidity and keeps you operational.
Why factoring for start-ups:
- Liquidity from the first turnover
- Financing that grows with you
- No risk due to payment defaults
- Strengthening of the equity ratio
- No waiting for customer payments
- Relief from accounting & dunning
Three reasons to utilise factoring as a start-up or young company
- Because it prevents liquidity bottlenecks Factoring provides start-ups with quickly available funds to reliably cover ongoing costs such as salaries, rent or material purchases.
- Because it improves the equity ratio Faster repayment of your own liabilities and leaner balance sheets improve your key figures with all positive effects – and increase your chances with banks or investors. This gives you the opportunity to base your financing on several pillars.
- Because it increases your competitiveness, for example by allowing you to grant your customers longer payment terms without incurring liquidity losses of your own. At the same time, we secure your receivables against default and take over the entire receivables management for you.
Would you like to know whether factoring is right for your start-up?
Then it’s best to use our free factoring checklist. In just a few clicks, you can get an initial assessment of whether factoring is right for your company – simply, quickly and without obligation.
As a business founder, you usually find it difficult to obtain capital to set up your company despite having innovative ideas. You also need to be committed to mastering all the challenges right from the start. As essential as many of these are, financial issues, receivables management and accounting will not usually be among your favourite tasks in the initial phase.
But they don’t have to be, as long as we offer you flexible options for settling outstanding receivables with the help of full-service factoring. Wenot only help you to operate sustainably right from the start-up phase, but are also happy to take care of some of the tedious paperwork for you.
The equity ratio indicates the ratio of equity to a company’s total assets. It is therefore important for the credit line of your bank or other lenders. How do you manage to improve your equity ratio as a start-up or young company?
Quite simply, from a business perspective, outstanding receivables do not yet count as equity because they initially only represent the prospect of available funds. If the outstanding receivables are purchased by us as a factor, they are immediately converted into liquid funds. The liquidity gained can be used, for example, to repay own liabilities. This results in a reduction in the balance sheet total (balance sheet contraction), which leads to a higher equity ratio while maintaining the same level of equity. In this way, A.B.S. Factoring can sustainably improve the equity ratio.
Your equity ratio, your balance sheet structure and, as a result, your rating improve. More resources are available for your core business. Factoring makes your liquidity more predictable. This allows you to adapt more flexibly to your market. You can grant your customers longer payment terms and are in a position to accept attractive large orders.
Marc Meier
Managing Director A.B.S. Global Factoring AG
Business idea check for start-ups
- Take a large sheet of paper.
- Draw in nine boxes.
- Answer the corresponding key questions.
Performance / ProductWhat exactly do you offer? How do you offer it?
What solution do you provide?
What characterises your offer? (unique selling points) What competitive advantages do you have?- Activities
What do you need to do to be successful?
What will the areas of procurement, production and sales look like in the future? - Resources
Personnel: How many employees are required?
Capital: How much money do you need to raise?
Where do the funds come from? (equity/debt capital) What could a good financing mix look like?
- Target groups
Who do you want to address? (age, gender, region, etc.) What is the shopping behaviour of your target group(s)?
Which customer segment are you targeting?
Will you be selling a niche or mass product? - Customer relationship
How do you reach your customers?
How do you retain them in the long term?
Which customer relationships already exist? - Marketing / Sales
How do you want to distribute your product?
Which channels would be the most efficient?
What measures should be taken?
- Partner
Which partners do you want to work with?
(production, investors, sales, press, IT, etc.)
What exactly do you need from each partner?
Which co-operations are conceivable/compulsory? - Expenditure
How high do you estimate the start-up costs to be?
What are the major costs?
What monthly expenses can be expected? - Revenues
What are your customers paying for?
How will they pay? How
how long will it take until
your customers pay? What
monthly income do you expect?
Growing with A.B.S. Factoring - right from the start
We see ourselves not only as a service provider, but also as a sparring partner for your start-up project. We advise at eye level, think entrepreneurially and open doors through our network.
A.B.S. Factoring for start-ups means:
- An experienced financing partner at your side
- Structured support for liquidity planning & receivables management
- Financial security so that you can concentrate on your idea
Secure yourself now
a free consultation
from A.B.S.
Would you like to know more about factoring and financing for start-ups?
Our experts will be happy to get in touch with you.
Further examples from practice
