Numerous companies in Switzerland are faced with the same problem: on the one hand, it is necessary to pay their suppliers quickly, but on the other, customers pay for 30, 60 or 90 days. This causes a strong imbalance between collections and expenses. To deal with this problem, supplier credit is a modern and practical financing technique.
Finance your orders with supplier credit
How does a supplier credit work? Your company buys goods from a business partner. Normally you have to pay the invoice of the latter according to the deadlines. The supplier credit is to finance your orders through a financial partner: the factor . The factor pays the invoices of your suppliers in your place within 24 hours, provided that you repay the amounts lent to him in a generous period of time. This system has several advantages:
- Your suppliers are guaranteed to get paid. This offers you a better basis for negotiating discounts and lower purchase prices.
- Benefit from payment terms that go up to 120 days for repayment to the factor, allowing you greater financial leeway.
- You can place orders at any time, even if the liquidity needed to place orders is not currently available.
- Your company’s liquidity increases because the outgoing cash flow is slower = positive cash flow.
- A supplier credit is therefore doubly useful: your cash flow improves because you do not have to pay your order immediately and at the same time you benefit from discounts and reductions from your suppliers.
For more information, Prestafix offers a page dedicated to supplier credit / reverse factoring and the possibility of a free consultation by a specialist!
What is factoring?
The term “supplier credit” is a simplified term for the financial principle of reverse factoring. Factoring is a financial concept that is still little known on the Swiss market, but is rapidly expanding. With “classic” factoring, it is the credits deriving from the sale that are financed by the factor. In other words, the so-called “classic” factoring allows immediate collection without waiting for the customer to pay. There are different types of factoring, let’s see which:
- Classic factoring : pre-financing of sales invoices. The seller is paid by the factor, which in turn is paid by the customer. It is a uniquely B2B solution.
- B2C factoring : works in the same way as the classic variant, but can be used to pre-finance the invoices of private customers. (B2C = business to customer).
- Supplier credit or renverse factoring : the renverse principle, according to which it is not customer loans that are pre-financed, but supplier invoices.
Within the factoring family there are already several special products that meet different needs. We recommend that you contact a factoring specialist to find out more about the nuances of factoring.
The advantages of factoring, an example:
Do you manage a commercial company that sells products delivered mainly to companies (B2B) and, in smaller quantities, to private individuals (B2C)? As distributors, you are always dependent on the shipments of your business partners, which you must pay as quickly as possible. Opt for classic factoring for B2B, B2C customers and supplier credit. Your company takes advantage of your decision in several ways:
- With supplier credit, your orders are paid in 24 hours . Take advantage of a 120-day payment term from most factors.
- You will receive the proceeds of the sale within 24-48 hours. This will greatly speed up your income.
- The result is faster cash flow , more liquidity and more flexibility for your financial planning.
The advice of a specialist
Factoring solutions such as supplier credit are highly specialized financial products that can be individually adapted to your company. For this reason, a complete consultation and a precise analysis of the company are necessary before concluding any contract. It is advisable to consult a specialist who can perform these analyzes professionally. For example, Prestafix Services offers factoring solutions with the analysis of the corresponding file so that you can receive a product suitable for your needs. In any case, it is recommended to contact an expert before signing the contract.