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Finance your SME's invoices easily with Hero

Finance your SME's invoices easily with Hero

Temps de lecture : 4 minutes

SME factoring is a financial solution for small and medium-sized businesses. By optimizing invoice management, this method enables SMEs to overcome cash flow challenges, promoting stable growth. In this way, factoring for SMEs offers a flexible alternative for strengthening the financial health of emerging businesses. In this article, we explain the specifics, conditions and advantages of this financing method.

Why factor when you're an SME?

There are several strategic advantages to factoring for SMEs:

Efficient collection management

Factoring enables you to delegate receivables management to the factor . Teams can concentrate on their core business without the constraints of tracking payments.

Reducing customer risk

By outsourcing receivables management, SMEs can reduce customer risk by entrusting collection to experienced professionals. This minimizes potential losses due to non-payment and increases predictability. Banque de France observatory on payment periods delays in excess of 30 days have a truly aggravating effect, since they increase the probability of SME failure of over 40%. .

Financing working capital requirements

This method helps SMEs improve their cash flow while avoiding debt . In fact, factoring is a fast, flexible financing solution which allows you to receive the value of your invoices minus factoring costs. It enables you to meet current expenses factoring, i.e. financing working capital. Factoring is particularly useful for SMEs with long or uncertain payment terms from their customers.

Guaranteeing receivables against non-payment

Factoring offers SMEs credit insurance that protects them against the risk of non-payment by their customers. If the debtor defaults, the factor compensates the SME for the amount of the invoice. Factoring enables SMEs to secure their sales and maintain their profitability.

Outsource accounts receivable management

In addition to collections management, factoring can also include an accounts receivable management component, which eases the administrative burden on SMEs .Le factor se charge :

  • Dunning ;

  • Cash receipts ;

  • Accounts receivable follow-up.

However, it is still possible to make partial or spot factoring . In this case, only part of the accounts receivable is managed by the factor.

Access a fast, affordable source of financing

Factoring is a simplified source of financing tailored to the needs and constraints of SMEs.

One of them is that SMEs have more difficult to access financing, especially bank financing . This is due to qualification criteria that are generally inaccessible to these small and medium-sized companies. In contrast, the eligibility criteria for factoring are less restrictive.

How do you choose a factoring company when you're an SME?

When choosing a factoring company for an SME, there are several criteria to take into account, such as :

The factor's length of market presence and reputation

It is important to choose a factoring company that has solid, market-recognized experience. Choose a factoring company with a good reputation and positive image. This can be a guarantee of seriousness, reliability and quality of service.

Competence in the field

It is essential to choose a factoring company that knows well:

  • Business sector;

  • Special features;

  • Constraints ;

  • SME risks.

This enables adapt the service factoring to the needs and expectations of SMEs, offering tailor-made solutions, efficiently managing collections and guaranteeing against non-payment.

Customer portfolio profile

It's worth choosing a factoring company that has a customer portfolio profile similar to that of an SME in terms of :

  • Size ;

  • Sales ;

  • Billing volume ;

  • Payment terms ;

  • Etc.

This allows you to benefit from :

  • More attractive financing terms ;

  • More competitive rates;

  • Shorter lead times ;

  • More personalized services.

Fast credit approval and financing process

It's important to choose a factoring company that offers faster credit approval and financing. This rapid processing means that SMEs have immediate cash flow at their disposal, without having to wait for payment from their customers.

This makes it possible to :

  • Financing working capital requirements ;

  • Paying suppliers ;

  • Paying your employees ;

  • Make new investments.


It is essential to choose a factoring company that offers flexibility . This flexibility also means that the factoring service can be tailored to the specific needs of the SME:

  • Periods ;

  • Customers;

  • Invoices ;

  • Etc.

We recommend choosing a factoring company that offers simple, fast, no-obligation solutions. Say goodbye to long-term contracts, minimum sales thresholds, personal guarantees and pledges of goodwill!

The different forms of factoring for SMEs

SMEs have access to various forms of factoring tailored to their specific needs:

Conventional factoring (full factoring)

The full receivables management by the factoring company including debt collection and the assumption of the risk of non-payment. This involves entrusting the factor with all accounts receivable. The factor advances the invoice amount, less a commission, and takes charge of collection and payment follow-up.

Conventional factoring is notified This means that customers are informed of the transfer of receivables and must pay the factor directly. It is advisable to SMEs with high sales volumes who work with creditworthy customers and want to delegate invoice management.

Spot factoring

Spot factoring enables SMEs to select the invoices to be transferred A flexible solution to meet short-term financing needs. It offers great flexibility to companies This solution can be used according to their cash flow needs, without changing their relationship with their customers.

Spot factoring can be notified or confidential Depending on whether or not customers are informed of the transfer of receivables. It is ideal for SMEs with one-off financing needs, or those wishing to test factoring before committing to a longer-term formula.

Fixed-price factoring

Flat-rate factoring is a form of factoring that provides an immediate advance on a global amount of invoices . This all-inclusive approach simplifies cash management, offering greater predictability. It includes invoice financing, bad debt insurance and receivables management, for a single, predictable cost .

Flat-rate factoring is generally confidential In other words, customers are not informed of the debt transfer and continue to pay the company. It's ideal for SMEs that want to keep their budgets under control and maintain customer relations.

How much does factoring cost for SMEs?

The cost of factoring for an SME varies according to several factors, including :

  • Company size ;

  • Invoice volume ;

  • The specific terms of the contract.

In addition, costs generally include :

  • Commissions on assigned invoices;

  • Management fees ;

  • Charges linked to the risk of non-payment .

Rates vary between 1% and 3% of invoice amount . Careful negotiation of the contractual conditions is crucial to ensure a factoring solution that is economically viable and tailored to the needs of the SME.

What are the disadvantages of factoring for SMEs?

Factoring, while advantageous, has certain disadvantages for SMEs:

The cost of factoring

Factoring is a financing solution that comes at a cost, which should be taken into account, as it directly affects the company's margin. In fact, factoring involves the payment of several fees, such as :

  • La management fee ;

  • La financing commission ;

  • Visit ancillary expenses.

It is therefore important to compare offers from different factors and negotiate the most advantageous conditions for its business.

The loss of customer relationships

Using a factoring solution can mean losing part of the customer relationship, and making the company dependent on the factor. In fact, factoring is often notified. In other words, customers are informed of the debt transfer and must pay the factor directly. Cela can damage the company's image which may appear less solid or credible.

The complexity and rigidity of factoring

Factoring can sometimes seem complex and rigid, requiring a commitment that lacks flexibility. In fact, factoring involves signing a contract with the factor . Such a contract may include restrictive clauses such as the obligation to dispose of a minimum or maximum percentage of sales, or prohibition on working with other factors .

How can you have your invoices financed quickly and cost-effectively with Hero?

Are you interested in factoring but afraid of the constraints?

Fortunately, there is a less restrictive and less expensive alternative: Hero . With Hero, we have created a payment and financing platform founded in 2020, offers payment facilities tailored to the needs of small and medium-sized businesses. payment in 3 or 4 instalments free of charge, or deferred payment within 30 or 60 days .

In concrete terms, you can pay your supplier invoices in 3 or 4 instalments, or deferred payment. On the other hand, the platform pays your suppliers immediately. These payment facilities also apply to your customers. They can also pay in 3 or 4 instalments or deferred payment. On the other hand, your accounts receivable are immediately paid by the platform . It's similar to factoring, but cheaper and with fewer constraints!

Request a customized quote

In conclusion, by rapidly converting receivables into cash, factoring offers SMEs valuable flexibility to stimulate growth and ensure efficient financial management.To choose the best factoring solution, it's important to negotiate the most advantageous terms for your business. L' SME factoring is therefore an effective solution for financing your bills with ease.

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Écrit par

Valentin Orru

Head of growth