Customer is subject to the criterion of society factor to assess the risk of different buyers. The Factor will only buy the accounts receivable that it wants, so the selection will depend on the quality of them, i.e. its term, amount and possibility of recovery. A company that is in temporary financial difficulties can receive very little help. Companies engaged in Factoring are impersonal, therefore do not tolerate your customer to deteriorate by a problem, because it is removed from the market on the costs of the Factoring indicates Wikipedia, that costs are not fixed but are studied based on: the characteristics of the factoring, if it is recourse or non-recourse. The characteristics of the assignor, turnover, import means of invoices, the sector of activity, number of debtors, medium term expiration. The characteristics of the debtor country which is, risk level, seniority as a client of the transferor etc. The rate of interest applied to the debts (conventional factoring) discount stands depending on the market, plus a commercial margin, as it occurs in the operations of commercial discount.
The accrual and payment of this interest rate is carried out at the time that the assignor receives payment in advance. For caixagalicia.es, Factoring services involve a cost or price that has to meet as a user of such services; the cost consists of two elements: the rate of the factoring, for the administrative services that perform the Factoring Company, which varies depending on the period of collection of bills. The rate of interest, to be applied when it avails itself of the modality that incorporates the advance of funds. However, the cost varies depending on the situation of the markets (in base to the Euribor 3 months + the differential; the revision of the final interest rate is monthly) and the risk that assumes the Factoring Company. Conclusions caixagalicia.es reminds us that it’s a product designed to measure of any businessman or professional and, especially, small and medium-sized companies which, with this formula, you can reduce the workload of the Administrative Department, outsource the accounts generated by sales and collection, as well as advances on the expiration of payment of invoices, all of this will improve profitabilitycreditworthiness and financial solvency of the company. It is known that factoring may appear expensive in many companies, in comparison to the banking services; However, in addition to considering the advantages against the trade discount, or another financial alternative, it is possible that many companies are surprised if compared the cost of factoring the cost of banking, whereas the compensations and deductions that are forced to make with these last. It should be noted also that factoring will allow the company to reduce its structure, with the cost savings that this implies.