Spares Warehouse – What is factoring?

Factoring, receivables factoring or debtor financing, is when a company buys a debt or invoice from another company. Factoring is also seen as a form of invoice discounting in many markets and is very similar but just within a different context. In this purchase, accounts receivable are discounted in order to allow the buyer to make a profit upon the settlement of the debt. Essentially factoring transfers the ownership of accounts to another party that then chases up the debt.

Factoring therefore relieves the first party of a debt for less than the total amount providing them with working capital to continue trading, while the buyer, or factor, chases up the debt for the full amount and profits when it is paid. The factor is required to pay additional fees, typically a small percentage, once the debt has been settled. The factor may also offer a discount to the indebted party.

(Courtesy of Trade Finance)

Spares Warehouse specifically assists Panel Beaters with their factoring and parts procuring service, taking away the administration of invoicing and freeing up capitol and cash flow so the panel beater can get on with what they do best. Fixing the bodywork of your car!

If you are a panel beater, anywhere in South Africa! Visit www.spareswarehouse.net and contact us to assist you in administrating your business efficiently!