Five out of ten companies use factoring to finance themselves

The coronavirus pandemic has hit the national economy hard and directly affected companies, especially lower ranks; For this reason, many are now looking for a way to get to the surface and for this they need liquidity. Unfortunately, high interest rates caused by inflation have reduced the desire to seek loans as Entrepreneurs also cannot raise enough money for their dues.

That’s why many businesses have resorted to factoring as a financing measure. According to Fintech Rextie research, 56% of Peruvian companies use it as an alternative to get liquidity.

What is factoring?

It is a financial instrument whereby an entrepreneur authorizes a third party (financial institution) to collect their invoices contained in invoices, invoices and checks. The third party pays them immediately and is responsible for the collection, thus companies receive immediate money for their services or delivered products, which are usually paid in installments.

What is factoring used for?

For this reason, the Fintech Rextie study also states that 57% of companies use factoring to get immediate liquidity, and 16% seek to reduce the operational burden by freeing their company from penalties; In addition, 14% use this tool to get competitive interest rates and avoid debts to financial institutions. The report also indicated that 13% use this tool to avoid burdensome personal procedures.

Factoring is an alternative financing with great prospects. According to public information from Cavali, about 500,000 invoices have been entered on the Facttrack trading platform until August 5 last year, confirming the growing trend, and it is expected that 1.5 million invoices will be sold by 2022, i.e. by 50% more than a year ago.” said Claudia Quintanilla, CEO and co-founder of Rextie.

The Rextie report also showed that at least 55% of companies have switched to digital factoring, while the rest prefer the traditional way; i.e. face to face. In the first case, 46% can perform their operations from a laptop, 38% use a computer, 14% do it without problems from a mobile phone, and 2% use a tablet.

How long can I receive money?

The Rextie report showed that average money back time 1 to 2 days According to 38% of surveyed companies, 22% received cash within 2-3 days, and 21% – more than 4 days; however, 19% achieved this in less than 24 hours.