Factoring or Discounting can relieve cash flow pressure as the factoring house or company pays your company a percentage of the value of your outstanding debtors’ book. When payment is received from customers, these monies are forwarded to the factoring company. The factoring company is paid a fee, usually determined by the amount of the outstanding payments or account balances.
The Factoring system is designed to assist in the management of outstanding debtors and the resulting interest expenses. As outstanding debtors form part of the company’s liability, overdraft interest is payable on the outstanding debtors amount. Management are able to reduce these interest expenses by factoring outstanding invoices to a financial institution which is able to finance the outstanding debt at an interest rate that is lower than the overdraft or loan rates currently charged.
Interest is payable from the day the invoices are factored until payment from customers has been received. On receipt of the payments, the financial institution is compensated.
The Factoring System enables selection of invoices that are to be factored and allows the selection to be reviewed. Relevant reports can be generated and customer’s balances that have been paid updated.
The factoring system provides the following functionalities.
- Invoice factoring bulk selection
- Factored invoice maintenance
- General factoring report
- Invoice factoring report
- Paid factored invoice report
- Aged factored invoice report
- Factored invoice payment update
Factoring invoice bulk selection
