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publicado em:21/06/22 5:25 AM por: gosites

Factoring is a financial transaction that allows a company to sell its invoices to a third-party company called a factor. In exchange for the invoices, the factor provides the company with a cash advance, usually within 24-48 hours. The factor then collects the payments from the customers and takes a percentage of the invoice amount as their fee. This process is known as factoring.

Factoring is often used by companies that have slow-paying customers or need the cash flow to fund their operations. It allows them to access cash quickly without taking on additional debt or borrowing from a bank. But, factoring is not a one-time transaction. It can be a continuing agreement between the company and the factor.

A continuing agreement means that the company can continue to sell its invoices to the factor as they are generated, rather than just selling a one-time batch of invoices. This provides the company with ongoing cash flow and eliminates the need to constantly apply for financing or wait for customers to pay.

There are several benefits to having a continuing agreement with a factor. First, it allows the company to streamline its cash flow management. Instead of having to wait for customers to pay, the company can rely on a consistent flow of cash from the factor. This helps the company to better plan its operations, pay its bills on time, and invest in growth opportunities.

Another benefit of a continuing agreement is that it can help the company to build a relationship with the factor. The factor becomes a trusted partner in the company`s financial operations, providing advice and support when needed. This can be especially helpful for small businesses that may not have a dedicated finance team.

A continuing agreement can also help the company to improve its credit rating. When a factor purchases the company`s invoices, they are essentially taking on the risk of collecting payment from customers. This reduces the company`s risk and improves its creditworthiness, making it easier to obtain financing in the future.

However, it is important for companies to carefully review the terms of any continuing agreement with a factor. Factors may charge fees for their services, such as application fees, monthly maintenance fees, and per-invoice fees. It is important to understand these fees and factor them into the cost of using factoring as part of the company`s financial strategy.

In conclusion, factoring can be a valuable tool for companies that need to improve their cash flow. A continuing agreement with a factor can provide ongoing access to cash and help the company to better manage its finances. But, it is important for companies to review the terms carefully and understand the costs involved before entering into any agreement with a factor.