Factoring means purchase of liabilities resulting from local or foreign turnover before the date invoice is due for payment. This service allows earlier receipt of money for goods and services delivered. Company, instead of contracting a credit can simply change liabilities to money. In other words, factoring is the answer to companies’ demand for fast access to cash, allows suppressing problems with liquidity and payment delays (and in special cases - lack of payment), improves cash flow, allows to do away with payments congestion, influences liquidity index and improves the structure of supplier’s balance. And all this within the scope of one product and one agreement, only with the use of issued invoice.

 

Three parties are involved in factoring operation: supplier (of goods or services), factor (in this case – Bank DnB NORD Polska) and recipient of goods and services (debtor). The initiating party of transaction is the supplier, who grants his clients mercantile credit. The factor finances the credit by purchasing from supplier his liabilities and transferring money to the supplier’s account. To put it differently, the bank purchases liabilities before due payment date, paying the supplier invoice face amount reduced by agreed fees.