Finance your invoices easily online with Hero (alternative to online factoring)

What is online factoring?

Factoring is a financial operation that involves assign your receivables to a factor in order to receive immediate payment. In the classic business model, payment of invoices is usually subject to a payment term. In the meantime, the company may need cash. This is where factoring comes in. This technique makes it possible to benefit from immediate liquidity without having to wait for the payment deadline.

In concrete terms, a company transfers its invoices to a specialized company known as a factor. In return, the factor pays the invoice amount. The factor is remunerated through a commission charged on invoice amounts. He then takes charge of debt collection from the company's debtors.

There are various types of factoring, including online factoring. We call it online factoring because the entire operation is carried out online, so all the steps are done remotely:

• Demande de devis ;

• Transfers ;

• Collection operations.

This is even more in line with the for speed and convenience of today's businesses.

Like conventional factoring, online factoring also combines three services:

• Customer debt collection ;

• Cash management ;

• A guarantee against the risk of debtor insolvency.

Why factor online?

Online factoring is a financing method with many advantages:

Speed and convenience

When faced with a need for liquidity, the classic solution offered to companies is the bank credit . However, the latter requires steps more or less restrictive. What's more, it takes some time for the funds to be released. Not to mention the fact that bank loans are generally inaccessible to smaller companies.

Online factoring is a fast and flexible method of financing. It's fast, because the approval procedure is generally carried out by in 24 hours . The funds are released within 48 hours . It's also practical, because all the steps can be taken online.

Flexibility

Factoring is a flexible financing method because suitable for all types of company, from very small businesses to major accounts. The factor replaces the banks and their constraints. The factor simply checks that the company's customers are flexible before agreeing to the factoring contract.

Guarantee against non-payment

On a vu que le factoring online inclut coverage against the risk of non-payment It's the same as conventional factoring. The company receives the amount of its invoices (less factoring fees), regardless of the debtor's situation. It should be noted, however, that to cover the risk of non-payment, the factor may require an additional guarantee. guarantee fund .

Improved cash flow

Online factoring is a financing solution that enables companies to benefit from liquidity without having to take on debt . Bank loans are interest-bearing. Factoring, on the other hand, allows you to obtain payment of up to 95% of the invoice amount, depending on the factoring company. It's not a loan, but an advance on your own receivables.

Delegation of collections management

Managing collections is a complex and time-consuming task. With factoring, the administrative follow-up of invoices, reminders and collections will now be the responsibility of the factor, freeing up the company's personnel for other tasks. assign them to more productive tasks.

The factoring company also takes care of check your customers' creditworthiness in advance. In fact, it is responsible for managing all customer accounts.

How to choose an online factoring company?

Here are the criteria to consider when choosing your factoring company:

• Costs. Compare rates between different companies d'e-affacturage . There is generally little variation in price between the different factors. Above all, you need to check what's included in their offers.

• Guarantees required by the factor. All factoring companies require a guarantee fund to protect against non-payment. Others also require the manager to act as guarantor. This is a criterion that must be taken into account.

• Financing limitations. In particular, you need to check whether there is a minimum or maximum level of financing. If there is a ceiling, you'll need to make sure it's adapted to your needs.

• Deadlines for releasing funds . The advantage of online factoring lies in the speed of the procedure. However, there can be disparities on this point, ranging from 24 to 72 hours.

How much does online factoring cost?

The cost of online factoring depends on several factors:

• The customer's financial standing . The higher the financial risk of the factor (the company assigning the invoices), the higher the cost.

• Factoring terms and conditions. The factor will charge a higher fee if the debtor does not need to be notified. This formality is not systematic, depending on the type of factoring.

• Type of offer . Customized offers are more expensive than packaged offers.

• The company's overall risk level. As we have seen, banks set restrictive conditions for their financing. Factors, on the other hand, are content to apply higher commissions in cases of high risk.

On average, the cost of factoring represents between 1% and 3% of the total amount of invoices assigned. This cost includes :

• Factoring commission. It depends on the scope of services provided by the factor. It generally represents between 0.7% and 2.5% of the total amount of invoices assigned to the factor.

• The financing commission . Generally indexed to 3-month Euribor, this fee varies little from one factor to another.

• Additional costs. They include an advance on our own receivables for administrative expenses, as well as expenses relating to one-off services.

It's important to note that all these fees are often negotiable.

What are the disadvantages of online factoring?

Despite the potential advantages, online factoring also has a number of drawbacks. disadvantages .

A service that costs money

It's true that factoring means you don't have to wait for your invoices to fall due. However, the amount of the invoices is deducted from factoring costs . As we have seen, the latter can be important depending on the profile of the company and its customers. It is therefore important to take the time to think about it before you jump in. This is all the more true for companies whose activities are not very profitable.

Only a portion of receivables are advanced

This is linked to the very principle of factoring. The factor must earn a return on the receivable itself. The company cannot recover its entire claim.

In addition, the factor requires the creation of a guarantee fund. A deduction of around 10% on the amount of sales assigned is then made. This guarantee fund is intended to enable the factor to cover any risks of non-payment.

However, the guarantee fund is returned at the end of the factoring contract.

Degradation of customer relations

Once the invoices have been assigned, the factoring company is responsible for collecting the corresponding receivables from the company's customers, sometimes by notify the customer ( depending on the type of factoring contract). As a result, the customer is made aware that his invoices have been assigned to a third-party company, and the bond of trust between the two companies may be broken, as the factor may become more intractable, risking losing some of your customers. To remedy this, however, you can inform your customers in advance of the existence of a factoring contract .

Sometimes rigid offers

Some factoring companies may require a commitment over several months or years. Some may not offer one-off factoring, thereby locking in the entire receivable. To avoid these pitfalls, simply choosing the right factor and solution.

How can you have your invoices financed quickly and cost-effectively online with Hero?

As we've seen, factoring is not a risk-free process, nor is it without drawbacks. If you want to avoid waiting for your payment deadlines and benefit from immediate liquidity, there's a solution for you: Hero . It is a B2B payment platform which offers fractional and deferred payment.

With Hero, you can offer your customers easy payment terms. They can then pay in 3 or 4 instalments or by deferred payment. These are selling points that are sure to appeal to your potential customers. But you won't have to worry about the impact on your cash flow. In fact, the platform advance payment of your invoices as soon as invoices are sent and validated.

Hero propose ainsi a factoring service without the drawbacks. In fact, Hero acts like a conventional payment platform, except that it advances you the invoice amount.

Similarly, when you buy from your suppliers, you can also benefit from the advantages of instalments and deferred payment. the platform advances your payment to your suppliers.

This makes Hero a particularly attractive payment solution adapted to VSEs and SMEs. In this way, they can preserve their cash flow and avoid the inconvenience of late payment.

In conclusion, online factoring is a financing method that offers companies speed, convenience and flexibility. However, you can use Hero to improve your cash flow while avoiding the disadvantages of online factoring.

Other articles on the same subject:

• Factoring: what is it and how does it work?

• Spot factoring: definition, advantages, operation

• Factoring for very small businesses: Hero makes it easy to finance your invoices

• SME factoring: finance your invoices easily with Hero

• Factoring for training organizations: Hero makes it easy to finance your invoices

• How much does factoring cost and how can I calculate it?

• Factoring company: what is it and what is it for?

• E-factoring: what is it?

• Factoring: what is it?