Factoring as a way to improve liquidity of businesses

- The factoring market in Poland continues to grow dynamically, which is confirmed by sustained two-digit growth of turnover. This is no surprise considering the fact that we continue to observe an increasing fall of liquidity of businesses (according to NBP results in this respect are worst since 2013). Businesses are starting to understand that a liquidity crunch can happen under any economic circumstances and is often independent of whether the particular business is in dire straits or is following a steep growth curve. Loss of liquidity can occur even in a completely stable business environment if the person responsible for finances causes a mismatch of the vintage structure of receivables and payables i.e. cash inflows and outflows. Factoring is an excellent instrument to improve a company’s liquidity. – Marcin Stefaniuk, Director of Factoring and Trade Finance Department in Bank Millennium, said.

Each type of factoring services offers to customers the possibility to get payment of receivables under issued invoices, to a specified account. Thus irrespective of the option selected by the company the service provides quick access to money frozen in receivables, offering payment of up to 100% advance even within an hour of sending the invoice to the factor. In this way customers get paid upon the sale and may use the funds for any purpose, not having to wait 30 or 60 days to get paid.

During the three quarters of 2017 companies – members of Polish Factors Association, financed close to 6.4 million invoices, while the value of receivables purchased by them exceeded PLN 132bn, 17.3% more than in the same period of last year. According to PZF more than 8,500 companies are already using factoring services.