Systems for receivables management can put a huge load on company's servers. Additionally, you have to spend valuable hours of developers' work to implement such systems. However, it can be easier. It is worth leaving this segment of your business in the hands of specialists and move factoring to the cloud. Invoices are handled by themselves, but you still keep control over your company's finances - from anywhere in the world. See why you should enter the factoring industry and how the crisis can help you do it.
From this article you will learn about:
- Factoring in times of crisis
- Systems being barriers to entry for small factoring companies
- Online factoring: safer invoice management in the cloud
- What is available within Comarch Cloud Factoring
In a crisis, someone gains and someone loses. The winner is definitely the factoring industry which is growing better and better in difficult economic conditions. We have to accept that: in the downturn phase, the priority for many companies is not to fight for the bottom line, but, above all, to keep their business safe. Here with help comes factoring, which is a good security of liquidity, the latter being kind of like blood in the human body. And in some cases, it even remains an alternative to a company loan which is really hard to get in the pandemic conditions.
The flexibility of factoring outweighs the rigid rules of banks, so it works better for financing current operations. When the road to credit seems closed due to lack of creditworthiness, the chances of getting factoring are still there. After all, to decide whether to grant it to a given seller, a factor takes into account primarily the structure of the receivables portfolio, payment terms, but also the financial condition of the counterparties.
Factoring in times of crisis
As Bartosz Lerka of Comarch S.A. points out, when the economy is in a phase of prosperity, it is difficult for new players to enter the factoring market. However, the crisis gives a chance to smaller entrepreneurs who would like to become factors. What are the benefits for them? Firstly, they diversify the area of their activity, thus reducing market risk. Secondly, by providing financing through factoring as an addition to their core business, they, in a way, condition their activity on the market after the crisis, because if the suppliers do not survive, the factor will not be able to continue to operate. However, offering this form of financing is far from industry solidarity. Capital groups are an exception, but in most cases the factor is guided by its own "to be or not to be" and by granting factoring, at the end of the day, it mainly helps itself and not its clients because it ensures the continuity of the supply chain.
So it turns out that small and medium sized companies can also become factors as long as they are in good financial condition. The only difference is that their clients are even smaller companies. The advantage of this situation is that smaller factoring companies can more flexibly adapt their financing models to their markets: allowing some to do more and treating others more harshly, taking into account the size of the client, history of cooperation or debt structure.
Systems being barriers to entry for small factoring companies
As Bartosz Lerka says, in practice, factoring can be run even in a spreadsheet. However, the roadblocks in this case appear very quickly. It soon turns out that there are so many invoices that a person will not be able to manage them effectively without a big risk of making a mistake.
But setting up your own system, especially when factoring is an auxiliary activity, is not worth it at all. The costs that have to be borne at the beginning are disproportionate to the profits that can be achieved. In such a situation, it's worth turning to specialists who will offer a tool that will flawlessly calculate interest, remind debtors of repayment, or check whether the transfer has been properly assigned to the invoice. Theoretically, everything can be done by humans, but not when there are hundreds or thousands of invoices, which is an everyday occurrence in business.
Online factoring: safer invoice management in the cloud
Comarch Cloud Factoring is a platform for debtors and creditors that uses microservices available in the cloud. From the user's point of view, it is a simple and intuitive panel that helps you to automatically link payments and receivables, import and post invoices en masse, and maintain control over your finances through an advanced notification system - for expiration date, payment and repayment of an invoice.
Cloud factoring can be used wherever the factor is - on a computer, but also on a phone, using a mobile application. Even on vacation, they can check their current balance at a glance, add new invoices without having to enter data manually and authorize multiple invoices with just a few clicks.
What is available in Comarch Cloud Factoring
Above all, the factor gains fast implementation, which is made possible by the modular structure of the application. It takes only a few weeks to use the system.
The application can be personalized, i.e. new modules can be added as the company grows. The subscription price also includes all improvements, technical support and system updates introduced by Comarch.
If necessary, you can get help from experienced specialists who will help you manage factoring in sales, accounting, risk or fraud prevention.
Not only people, but also artificial intelligence can be of help here. The system is designed on the basis of constant monitoring, and artificial intelligence catches all warning signals, errors in contracts or risk factors related to given counterparties. And humans can react early enough.
Employee productivity is at a premium, and Comarch Cloud Factoring can automatically settle up to 85% of payments. This allows human resources to be used for more demanding and creative tasks.
The platform supports the most popular factoring products, such as:
- factoring with or without recourse,
- reverse factoring,
- open and silent factoring,
- maturity factoring,
- balance sheet factoring,
- receivables management.
The creators of the platform emphasize that the key to success in financing receivables are four pillars: proper analysis of customer needs, effective risk analysis, elimination of fraudsters and openness for external sources of data with a high level of security. All this is provided by automation, which should also be used in factoring processes. Still, we should not forget about the human element, which in many cases is irreplaceable. Therefore, it is worth combining advanced algorithms, which can be used in recurrent processes and for warning systems, with irreplaceable human resources, which can be used for creative and supervisory activities.
Article written by direct.money.pl in cooperation with Comarch [LINK]