Inkasso - Factoring and Invoice Discounting Procedures

Mahnbescheid Kosten: Some of the types of out standing debts can also be very difficult to actually fund even through the factoring or also invoice discounting procedure. This can also be as a result of either the debt's basic nature or to the circumstances which actually will affect a factor's natural ability to collect in the out standing debts to completely repay their lending amounts in the rare event that the business really fails.

The main difficulties here are to come out in respect of the contractual debt for the main provision of a service over a very long period involving stage wise payments. Engineering contracts for small capital equipment are a good example, where a particular payment of a third with the order, a third on complete delivery and a third on equipment commissioning is not very unusual.

Contractual debt is always very much difficult to fully factor since if at all the supplier ever fails part way through the delivery of a written contract, its client or customer will also normally seek to offset the basic costs of totally replacing the supplier and any of the associated disruption extra costs (which then particularly in the building construction industry can extensively be quite a lot of creative), against the original debt out standing.

Construction contracts which will very often run for several many months or even for years, involving a large series of stage payments are also another particular problem area as they are normally based on a long process of applications rather than payment invoices for a particular definitive amount. Under this original system the professional builder actually raises an application for the payment which is based on their construction estimates of the total value of the job to be completed to date which then has to be agreed by the client/customer's architect or their surveyors even before the final agreed total sum also becomes fully payable, normally within two complete weeks. The bulk of a construction company's debtor’s book therefore usually consists of the applications which will also turn into a bad debt, but where ever the value of the debt amount is uncertain until shortly before even it is fully paid over.

There are only a limited small number of factors who will actually provide the full funding even against this type of out standing debt and this is usually at the lower levels of advance payment (say around 50% as against a more normal level of about 75% - 85%, together with a higher requirement for assured personal guarantees) as they have even less certainty as to both the collect ability of any of the debt amount and in the case of all the applications, its actual real cost value payments.

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