Factoring provides liquidity and room for growth
Factoring has become a strategic financing component for small and medium-sized enterprises. nordest Factoring and HCOB have been collaborating in the factoring business for many years. Simon Schach, Managing Director of nordwest Factoring & Service GmbH, discusses the growing importance of predictable liquidity, flexible financing solutions and the role of factoring as a strategic tool for growth and working capital management.
The factoring market in Germany is proving to be very robust despite the weak economy. Which developments are currently having the greatest impact on the business?
We are currently seeing that SMEs are paying much closer attention to predictable liquidity and stable financing partners. Especially in times of economic uncertainty, quick decisions, personalised support and flexible financing solutions are becoming increasingly important.
At the same time, factoring is used more strategically today than it was a few years ago – not only to secure liquidity, but also to finance growth and stabilise supply chains.
Which sectors are interested in factoring, and what are your clients’ main concerns in the current market situation?
In principle, factoring is of interest to almost all sectors that work with payment terms. For example, we have a particularly strong presence among trading companies, service providers, freight forwarding & logistics firms, and medium-sized manufacturing businesses.
The current challenges are often similar: rising costs, more cautious payment behaviour and a greater need for financing in day-to-day operations. Many companies want to secure their liquidity whilst remaining capable of acting and ready to invest. This is precisely where factoring offers real added value.
Liquidity is currently the decisive factor for many companies. How does factoring help to expand financial flexibility – and what additional benefits does this instrument offer beyond that?
Factoring creates immediate liquidity and ensures that companies can access their tied-up capital more quickly. This greatly improves planning security. Furthermore, on request, we also take on parts of accounts receivable management and offer protection against bad debts. Many customers value precisely this combination of financing, security and operational relief.
Factoring is regarded as a particularly flexible form of financing. What makes it so adaptable?
The strength of factoring lies in the fact that the financing develops dynamically in line with turnover. When a company grows, the available liquidity automatically grows with it. This results in a highly flexible financing solution that adapts directly to the company’s business performance.
Furthermore, factoring can be tailored to individual needs, both in terms of industry-specific requirements and in line with the company’s strategy. It is precisely this adaptability that makes factoring so attractive to many SMEs.
What role does Hamburg Commercial Bank play as a partner at your side?
Hamburg Commercial Bank is an important financing partner for us, with whom we share a relationship based on trust and a focus on solutions. Particularly valuable in this regard is our shared understanding of SMEs and their requirements in a dynamic market environment.
“HCOB is an important financing partner for us, with whom we share a trusting, solution-oriented dialogue and a common understanding of the SME sector.”
What significance does factoring have for the active management of working capital, and to what extent does it help companies to permanently reduce their capital tied up?
Factoring is a highly effective tool in working capital management. The rapid inflow of liquidity means that receivables are immediately converted into available funds. This significantly reduces capital tied up and gives companies additional financial flexibility.
This not only helps in the short term, but also strengthens companies in the long term, for example when making investments, purchasing goods or during growth phases.
Many companies now recognise that efficient working capital management has become a genuine competitive factor.
Why should factoring be a permanent feature of German companies’ financing mix in the long term?
Today, more than ever, companies need flexible and reliable financing solutions. Factoring therefore fits perfectly into a modern financing mix because it links liquidity directly to business performance.
This is particularly crucial for SMEs: factoring creates financial stability, reduces risks and, at the same time, opens up scope for growth. That is why we do not view factoring as a supplement for specific situations, but as a permanent strategic financing instrument.