Debtor financing is quite simple: a supplier of goods or services transfers their outstanding accounts to Midt Factoring A/S, which in turn assumes the responsibility of financing them.
Credit sale turns into cash sale
In principle, a credit sale turns into a cash sale, as the business in question typically receives up to 80% of the invoice sum immediately. The remainder is paid on receipt of the debtor’s payment. Midt Factoring A/S can offer payment on a daily basis or by individual agreement.
Invoice discounting can be compared to a bank overdraft. The amount of credit available is determined by the volume and quality of debtors, and interest is approximately the same as on an overdraft.
Sound and flexible financing – quick liquidity
Through debtor financing a business can quickly convert its debtors into liquid assets. This is quick liquidity, that immediately improves the cash-flow of the business, enabling it to make more advantageous purchases, make use of cash discounts etc.
The business may use financing when necessary, e.g. concurrent with turnover, growth, seasonal fluctuations etc. Subsequently, there is no interest expense during periods where the financing option is not utilized.
If you would like additional information, one of our Sales Managers will be happy to contact you.