9. Does resorting to Factoring mean that a company has financial trouble or difficulties in its relations with customers ?

Transferring credits in a Factoring relationship is a normal part of corporate life, a sign that a company has a valid, modern organisational set-up, meaning it pays attention to how it governs credits and plans the resulting cash flows.

The EU recommends that member states encourage use of Factoring as a tool promoting more effective management of credits arising out of commercial transactions.

People who are not familiar with Factoring sometimes tend to consider it a marginal financial tool or a way of recovering problematic credits, and therefore see resort to Factoring as a sign of financial troubles and poor credit portfolio quality, associating it with difficult circumstances.

But in actual fact only a very small number of companies have trouble with their customers once they have been transferred in a Factoring relationship.


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