Factoring seems a rather expensive way of getting capital. Doesn it?
No. The correct way to evaluate factoring is in terms of the seller’s company’s growth and the opportunity a seller loses by foregoing business on account of unavailability of funds. By enabling the seller to gain access to additional working capital without restricting other forms of borrowing, factoring provides a unique credit service. And remember, when the seller counts the additional savings he will enjoy in terms of staff salaries, office overheads, bad debts and all the incidentals that go into keeping his sales ledger and chasing for payments on his investments, the seller will see just how valuable factoring really is.
