Market uncertainty: how factoring supports liquidity

In a context like the current one, where both domestic and international markets are characterized by strong instability and rapid change, a company must be able to navigate an increasingly complex landscape. Using the right financial solutions and relying on trusted partners is therefore essential to respond flexibly to production and management needs. We discuss this with Marianna Casale, Sales Representative at the Rome Branch.

What solutions can a company rely on at a time of uncertainty in the market?

Market uncertainty certainly risks having a negative impact on investment and overall economic activity. In this context, entrepreneurs can rely on various solutions to ensure the stability and growth of their companies. Among these solutions, two are particularly useful for better managing company liquidity: factoring and medium-long term financing.

Factoring is a financial solution that allows companies to immediately obtain the liquidity needed to meet their operational needs, without having to wait for customer payments. By anticipating cash flows and managing debt collection, a factor like Banca Ifis supports a company’s growth, allowing businesses to free up resources for investments and new business opportunities.
With medium-long term financing, however, it is possible to finance investment projects, such as the purchase of new equipment or the construction of new plants. Financing could also be provided to provide the liquidity needed to support business growth and seize market opportunities.

How does factoring support the company in a complex economic environment?

In a complex economic environment where there is a fear of acquiring new orders or carrying out work of a significant amount compared to the company’s standard, factoring, by providing a thorough check on the assigned debtor, provides the entrepreneur with valuable information on the goodness of his customer portfolio.

In the presence of a solid debtor, factoring allows larger amounts to be disbursed than with traditional invoice advance lines: by transferring the risk from the (usually smaller) assignor to the assigned debtor, factoring allows companies to request immediate liquidity.

Factoring also allows for longer payment terms than other traditional solutions (just think of receivables from public bodies) and does not impose concentration limits: for example, single-client companies have the option of liquidating all their receivables.

Find out about our factoring solutions

Find out more

Which types of factoring offer greater guarantees to the company?

The factor can assume the customer’s credit risk, thus reducing the company’s financial exposure. In particular, factoring offers two types of products to guarantee the insolvency of the assigned debtor.

Non-recourse guarantee: If the debtor fails to pay, the guarantee is activated after 210 days from the due date of the invoice in the case of private customers, after 24 months if the counterparty is a public body. Obviously, the customer, if they wish, can request immediate liquidity by paying the invoice in advance.
Outright purchase (OTP): With the OTP, in addition to the insolvency guarantee, the company has the opportunity to improve its balance sheet ratios through the derecognition of the receivable: the assigned receivable is removed from the balance sheet.
Basically, the assignor ‘sells’ its trade receivables to Banca Ifis, which becomes the new owner, and the latter assumes responsibility for collecting the receivable, even in the event of non-payment by the debtor.

Advertising message for promotional purposes. For the contractual conditions of Factoring and Medium/Long-Term Loans, please refer to the information sheet available at branches and in the Transparency section of the bancaifis.it website