Strong liquidity for a strong industry – factoring as a growth driver
Challenge: High capital commitment in metal processing
A medium-sized metal processing company specialising in components for mechanical engineering and the construction industry regularly processes large orders for industrial customers. The industry is highly capital-intensive: high material costs, energy-intensive machinery and long payment terms represent a considerable financial burden. In particular, the pre-financing of new projects is made difficult by long payment terms from customers.
Calculation example: High costs meet long payment terms
Monthly turnover: € 800,000
Customer payment terms: 40 days, up to 90 days in individual cases
Ø Average receivables period in your industry: 50 days
Ongoing monthly costs: € 605,000 (materials, energy, maintenance, rent, etc.)
The challenge without Factoring
Without factoring, the company is heavily dependent on customer payments. Long payment terms of up to 90 days in some cases mean that there is a lack of liquidity for important running costs such as purchasing materials and maintaining machinery. A payment default or delay could lead to serious bottlenecks and even production stoppages. In addition, there is a lack of funds for e.g. taking advantage of cash discounts from suppliers, which jeopardises competitiveness.
Our solution: Factoring ensures liquidity and competitiveness
Factoring keeps the company liquid and allows it to respond quickly to financial requirements. The early payment of a large portion of invoices makes it possible to purchase materials and maintain operations without restrictions. In addition, the factoring partner assumes 100% of the default risk for receivables, giving the company additional security. Thanks to the secured cash flow, the company can pre-finance new orders and remain competitive.
Your advantages at a glance:
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Financial flexibility: The secured cash flow allows strategic purchases to be made and better terms to be negotiated with suppliers. The company can react more quickly to market changes.
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Immediate liquidity: Instead of waiting up to 90 days for customer payments, the company receives € 720,000 immediately – enough to cover running costs of € 605,000 and respond flexibly to market changes.
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Growth without waiting: Thanks to Factoring, new orders can be pre-financed without delay, enabling the company to expand its market position.
Factoring allows the company to remain flexible, competitive and ready for further growth in a capital-intensive industry.
*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.
