Aequitex Factoring vs. traditional Finance - Pros and Cons

Introduction

When it comes to improving a company's liquidity, there are various financing options available. Factoring and bank loan are two popular choices that companies consider. But which one is the better option? In this blog post, we compare factoring and bank credit, highlighting the pros and cons of both financing methods to help you make the best decision for your company.

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Factoring with Aequitex: Fast Liquidity, Flexibility and Transparency

‍Factoring with Aequitex offers companies the advantage of receiving fast liquidity by selling their outstanding invoices via the Aequitex factoring marketplace to investors. This allows them to access funds quickly, instead of waiting for their customers to settle their invoices. Factoring with Aequitex provides a fast and flexible financing option that can grow with the company. It is an ideal solution for businesses especially with seasonal operations or irregular payment receipts. In contrast to classic factoring, any company can offer its customers invoices for sale on Aequitex, regardless of the invoice amount or volume.

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Bank Loan: Long-term Financing with Interest Burden

A bank loan is a traditional form of business financing. Banks offer various types of loans, such as working capital loans or investment loans, to support businesses in their development. A bank loan is suitable for long-term investments or larger projects where regular repayments over an extended period are feasible. In contrast, factoring has traditionally been considered for short-term financing horizons. However, Aequitex now also offers a factoring solution for long-term financing projects with its Enterprise Solution. Through an API interface, for example, the entire accounts receivable management can be handled via Aequitex.

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Risk Assessment: Factoring vs. Bank Loan

‍In factoring with Aequitex, the risk assessment of debtors lies with the factoring provider (with the investor by default, but SMEs and investors can choose other factoring options individually). This means that the risk of non-payment for unpaid invoices is assumed by the factoring provider. In contrast, with a bank loan, the company bears the risk of loan repayment, regardless if the customer pays their invoices or not.

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Flexibility: Factoring vs. Bank Loan

‍Aequitex factoring offers companies high flexibility, as the amount of financing depends on the outstanding invoices. The more outstanding receivables a company has, the more liquidity it can obtain through factoring. Bank loan, on the other hand, has fixed credit lines and terms that apply to the entire loan.

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Collateral: Factoring vs. Bank Loan

‍In factoring with Aequitex, the outstanding invoices serve as collateral for the financing. The company pledges the invoices to obtain liquidity. Bank loan usually requires additional collateral, such as assets or personal guarantees.

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Speed of Financing: Factoring vs. Bank Loan

Factoring with Aequitex provides easier and faster financing compared to a bank loan. Once uploaded, the invoices appear on the Aequitex platform for investors to purchase and the SME will get its money immediately. Bank loans often require a more extensive application and evaluation process, leading to longer waiting times.

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Conclusion:

Whether from a short-term or long-term perspective, the Aequitex Factoring Marketplace offer is worth considering. The platform enables SMEs a simple, fast and fair access to liquidity at the push of a button and is offering API Integration and enterprise solutions.