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Factoring is required by companies that work on highly competitive markets using deferred payment terms and sales on credit. Factoring is also required if the company is developing rapidly: increasing sales or conquering new markets. Usually the company's own resources are not enough to completely satisfy the increasing production needs for current assets.
Factoring is not required only in the case if the company has a strong foothold on the market and does not plan to move on, or if all sales are carried out on prepayment basis.
To put it shortly, if the company is developing, factoring can provide a stable asset inflow required for such development and avoid a large portion of risks.
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