A firm fight choose to factor its
receivables for the following reasons:
- Fast Cash: As cash is given by a
factor to the firm earlier than it is to be received by the
clients
- No further debt: To fund its
working capital, firm does not need to take further debt as it will
receive cash sooner than expected.
- It aids in maintaining liquidity of
the firm which helps to get good credit ratings.
- It reduces risk of the firm for its
receivables
- It helps in strategic planning for
business growth.
- It helps in rating customers credit
so as trade with better customers.
- Protection from bad debts if
non-course factoring is used.