FACTORİNG COSTS

It means the assignment of forward receivables. In other words, businesses can use promissory notes or cheques instead of cash payments in their commercial activities. In order to collect these promissory notes or checks, they have to wait for their due dates. Companies in need of cash give these promissory notes or checks to companies that do factoring business legally, obtaining a certain amount of cash in return and eliminating their cash problems.

Usually, small businesses often run into cash shortages in their commercial activities, so when they receive new orders, they make such transactions to cover their production costs. Factoring comes into play after that and the governor pays the company a certain amount of cash by acting as if there are no sales.

FACTORİNG COMPANY RATES

You can hear a lot of false information about this subject or you can see it when you search on the internet. You can solve this issue by talking to factoring companies one-on-one. However, the main factors that determine factoring costs are the factoring interest determined by the factoring company and how many days the promissory note or check is due.

The most thought-provoking issue in factoring costs is the question of what the cost of the promissory note or check will be. How much will the factoring company cost? You can find the answers to these questions in the formula below.

Factoring Fee = Interest Amount + Commission + Tax

 

factoring costs

FACTORING INTEREST

Factoring interest is a rate that can change according to the direction of the market. The main factors that determine the factoring rate are the central banks and the SME loan rates available in the market. The longer the maturity amount of the check, the higher the factoring interest.

The commission amount is another important factor affecting the factoring interest. We can say that this commission is a price received as profit by the factoring company. This commission may vary according to the management expenses of factoring companies. Risk premium is also included in the commission. The risk premium may vary according to the market value of the company responsible for the promissory note or check. Generally, the creditworthiness of banks is applied for risk premiums. A higher risk premium is applied to the company with low credibility. To make it more understandable, we can summarize it as follows; Evaluation can be very different between a firm with higher financial power and a firm with lower financial power, and accordingly factoring interest, commission and risk premium are applied. And lastly, as in every legal business, there will be tax in this business in terms of being audited by the state. Factoring tax is determined by the state. It is generally applied at 5% worldwide.

There is a lot of value in calculating the cost of factoring services. For this reason, we recommend that you consult factoring companies in order to reach clear figures.