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Get smart ideas off the ground with factoring for start-ups

Even with media hype and high public awareness, it is not easy for start-ups to obtain the working capital they need through bank financing. Factoring for start-ups means that even new businesses can gain liquidity quickly and flexibly. Financing through factoring is based on the transfer of accounts receivable to the factoring supplier, who pays the invoiced amount to the company within 24 hours and claims the payment from the debtor in turn. As well as effectively combating liquidity bottlenecks, A.B.S. full-service factoring for start-ups offers coverage against bad debt losses, and takes the pressure off your fledgling business by taking over time-consuming receivables management. This allows you to invest your resources in business development and further growth.
Factoring also offers start-ups a number of welcome side-effects. For one thing, the sale of receivables and the on-time settlement of own liabilities contracts the balance sheet, which enhances your equity ratio and your company’s standing with the bank. At the same time, the extra liquidity gives you a critical competitive edge: you can, for example, grant longer payment terms to your customers without sacrificing liquidity.

As an established financial services provider for Swiss SME, we have the experience and expertise to effectively support your corporate growth.

Mathias Hörnlimann
Marketing / Sales

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Factoring gets start-ups off the ground

In the start-up phase of a company, financing is an extremely important issue. As well as having sufficient seed funding, the liquidity of a start-up must be ensured from day one to facilitate long-term business operations. Start-ups often run into financial difficulties because their working capital is insufficient to cover the initial phase, which in turn leads to liquidity bottlenecks. In many cases, it is not low demand for products and services that causes problems for young businesses, but long payment terms on invoices for services they have already rendered. For start-ups, it is not easy to persuade banks to grant an overdraft facility to plug gaps in their finances because of the high risk involved.

With full-service factoring from A.B.S., start-ups benefit from precisely the right financing, which provides the liquidity they need alongside a range of additional services. The funds provided can be invested in new orders and further corporate development, helping the young company expand to competitive proportions.

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Four reasons why start-ups should consider factoring

  1. Avoid liquidity bottlenecks. Even start-ups can have sufficient funds with factoring. The quickly available and flexibly controlled liquidity can be used to meet liabilities and fund new investments.
  2. Improve the equity ratio. Factoring is a financing instrument that presents a full-value alternative to bank loans. The instant converting of outstanding receivables into cash contracts the balance sheet while improving the equity ratio. This enhances the company’s rating as well as the reputation of the start-up in the eyes of banks and insurance companies.
  3. Increase competitiveness. Factoring allows start-ups to grant their customers longer payment terms with no problems and without impairing their own liquidity. The invoices acquired are also secured against non-payment – so the danger of a sizeable non-payment causing financial trouble for a new business is averted.
  4. Focus on core tasks. With us, a factoring solution is always accompanied with full service. Along with protection against non-payment, this includes the handling of receivables management on your behalf, prior credit checks of debtors, dunning and, where necessary, debt collection. You are therefore free to concentrate on your actual goals and utilise the scope for expansion.

We’ll finance your future!

Your success is important to us, which is why we provide you with the liquidity you need and offer numerous additional services. Together, we’ll get you on the fast track.

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Why a positive equity ratio opens doors for start-ups

The equity ratio is an important indicator for a lender. It indicates the ratio of equity to the total assets of a company. In the case of newly founded companies, the equity capital is usually still low. Bank-based financing for further growth is therefore out of reach. The securities are too small and the credit rating of the young company too low.
Full-service factoring from A.B.S. enables start-ups to improve their equity ratio for the long term through the assignment of outstanding receivables. From an accounting point of view, such receivables are not part of equity capital as they represent only a promise of future liquidity. However, if factoring converts these receivables into immediate liquidity and thus covers the company’s liabilities, the right-hand side of the balance sheet is shortened. The equity ratio increases while equity capital remains constant. The improved financial structure increases the prospect of a start-up negotiating access to bank loans at attractive credit terms.

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