Guide: Factoring for businesses
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Business loans as an alternative to factoring
If you have a business with a lot of invoicing, you know that liquidity and cash flow are key! Long payment terms of 30, 60 or 90 days can put a stop to your growth. That's why some entrepreneurs take the opportunity to sell their invoices.
Avoid fees and long contracts with volume requirements - apply for a business loan with Qred Bank instead!
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Feel the freedom to choose the amount you want to borrow within the credit limit you get approved for. Avoid long lead times and payment times to get invoices you want to sell approved - a business loan with Qred is paid out the same day!
Is factoring a good solution for my business?
Selling your invoices can be a good idea to solve liquidity and cash flow issues over a longer period of time, but if you need to make larger investments to grow, a business loan is often a better option.
Brief summary
Factoring means that a company sells its invoices to a factoring company to quickly access cash, improving cash flow and reducing the risk of unpaid invoices. With Qred, businesses can easily apply for business loans and get paid the same day. This allows businesses to manage their financial needs efficiently and focus on growth.
Factoring made easier
Factoring is a comprehensive financial service and is also known as invoice discounting. There are companies that specialize in factoring and help you improve your cash flow.
What is factoring?
Factoring is a financial service where a company sells its invoices to an external party, usually a factoring company. By selling the invoices, the company immediately receives part of the payment instead of having to wait for customers to pay. Finance companies then take over responsibility for collecting the payments from customers.
What are the benefits of factoring?
How does factoring work?
We understand the importance of strengthening companies' liquidity and providing quick access to working capital. But we believe in providing flexible business loans instead.
Factoring with recourse
Recourse factoring is a specific type of factoring where we have the right to recourse, i.e. demand payment from the company if the customer does not pay the invoice on time. This means that the company can recover the invoices sold to the factoring company if the customer does not pay. Factoring with recourse is common in certain industries where there may be a higher risk of unpaid invoices.
Non-recourse factoring
Non-recourse factoring means that you do not have the right to demand payment from the company if the customer does not pay the invoice on time. This type of factoring is more common in industries where the risk of unpaid invoices is lower.
Advantages of invoice credit or factoring
- Fast liquidity: Invoice discounting allows businesses to access cash immediately instead of having to wait for customers to pay their invoices. This allows the company to manage its short-term financial needs and continue to grow.
- Reduced credit risk: When companies sell or mortgage their invoices to a factoring company, the responsibility for collecting payments from customers is transferred to the factoring company, reducing risk. This reduces the risk of unpaid invoices and gives the company better credit control over its customers.
- Increased liquidity: invoice discounting gives companies immediate access to part of their invoice payments. This increases the company's liquidity and allows them to invest in growth or manage their running costs.
- Improved cash flow: For businesses with customers who have long payment terms, invoice factoring can be a good way to free up cash.
What type of financing is best for you?
Qred Bank offers a business loan for larger and longer-term investments or a business card for everyday purchases. Choose the one that suits you best right now - or why not both?
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Founded in Sweden in 2015 by entrepreneurs for entrepreneurs, Qred has quickly become the premier bank for flexible business loans. Qred is now the market leader in the Nordics and also operates in the Netherlands, Germany, Belgium and Brazil.
Our team understands the challenges and needs of entrepreneurs, and we are proud to be one of the highest rated banks for businesses on Trustpilot.
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Page written and fact-checked by
Rushi Gupta
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Country Manager Sweden
Qred Bank AB
Rushi is responsible for the Swedish market at Qred Bank and is an expert in corporate finance and entrepreneurship. Educated at Linköping University and holding a Master of Science in Industrial Economics, Rushi has a broad experience from P&G, Centigo and later as team lead at Trustly and Head of Data Insight at Schibsted before joining Qred Bank.
