Brilliant results through Factoring
Challenge: Long payment terms strain liquidity.
A medium-sized commercial cleaning company faced a typical challenge in the industry: payment terms of up to 90 days. Customers paid late, while running costs – especially wages and materials – had to be covered immediately. This liquidity gap made business planning difficult and limited growth.
Calculation example: Receivables tie up capital
Monthly turnover: € 500,000
Customer payment terms: 30 days
Ø Average receivables period in your industry: 40 days
Ongoing monthly costs: € 420,000 (wages, materials, rent, administration)
The challenge without factoring
The company issued invoices totalling € 500,000, but had to wait an additional 20 days for payment. During this time, high costs continued to accrue, resulting in financial bottlenecks. Timely wage payments were only possible through reserves or additional credit facilities. In addition, the insolvency of a customer can quickly create a large financial gap for the company. The services rendered are already on the cost side of the income statement.
Our solution: Factoring secures liquidity
By using factoring, the company sells its invoices to Deutsche Factoring Bank immediately after they are issued. The bank immediately pays out 90% of the invoice amount – i.e. € 450,000 within 24 hours. The remaining 10%, minus a factoring fee, follows after payment by the customer. The interest rates are in line with market conditions. Debtor monitoring and protection in the event of bad debt give the company the security it needs for further growth.
Your Factoring advantages at a glance:
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Immediate cash flow: No waiting months for payments to come in – the company receives its money within a day.
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Planning security: Running costs can be reliably covered, creating financial stability.
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Enabling growth: Thanks to secured liquidity, the company can invest in personnel and modern cleaning technology.
With Factoring, the company remains able to act at all times – regardless of long payment terms from customers.
*The figures shown in all examples on this page are fictitious and are for illustrative purposes only. Results may vary depending on the customer due to different parameters.
