Customers, suppliers and business: Ifis Finance’s answer

What if I could pay my contractors earlier? I would get a discount on these costs… Maybe, there are also some other advantages possible – without risk and tons of formalities? I wonder… “how much” could I earn on it? What if, for example, I “save” in this way for the salaries of several of my engineers? Eeeee… I don’t think it can be done… Where am I supposed to get the money for faster payments to suppliers?

On the one hand, seasonality and sensitivity to economic fluctuations make it difficult to plan and run a business, and on the other hand, it requires financial management to maintain liquidity in periods of declining turnover. It is important to be able to plan next steps to get out of the temporary downturn as soon as possible – acquire new orders, gain new customers, launch an advertising campaign, participate in trade fairs, buy the necessary materials for the next order, etc.

This often means that you need to support your company with external funds – a loan or a credit – and this is where new reefs appear: seasonality and temporary economic downturns complicate obtaining traditional forms of financing. In such moments, it is difficult to demonstrate that the business is stable, developing and bringing profits, which is what banks value when deciding to grant financing. And that’s right – profits! How to maintain them if necessary financing means additional cost. Even if you do not suffer the slowdown right now, financing further, even more intensive development and preparation for further orders and deliveries also requires bearing some costs…

Many entrepreneurs struggle with this dilemma – how to invest in the development of the company without reducing its profitability? How to raise money and maintain liquidity?

Offering discounts to suppliers in exchange for faster payment is one of the possibilities that will help in temporary troubles, or simply enable faster reinvestment of capital in new orders/deliveries. What if we flip the perspective and look at it as an opportunity to generate additional incomes?

Let’s imagine two situations:

• You purchase raw materials and semi products which you need to produce your goods. Normally, you pay as agreed – after 30 days from invoice date. Many suppliers of yours are willing to offer you a discount to speed up the payment and very often you agree on that as this means for you real savings, but… you need to invest your working capital in such situation. These payments instead can be funded by Ifis Finance within Supplier Financing Program, based on the factoring agreement signed with your supplier. Cost of this factoring is equal to the discount they would offer you for having the payment earlier than it comes from the invoice. If the discount (cost charged to the supplier) is 3% and half of it could stay in your coffers (commission component), you would free up your money for free and still save 1,5% on cost. And all this without involving your own money which can be invested into development of your own business!
• You sell goods with a deferred payment term – you get the money after 30 days. When you get a chance – a discount offered by your supplier in exchange for early payment – your money is still frozen in sales waiting for payment and the bargain passes you by. Instead, you can use factoring – you will receive the money against your invoices from Ifis Finance earlier and use it to speed up payment for deliveries. If factoring cost you 1.5% per month, and the discount obtained from the supplier is higher than that, e.g. 3%, it means that you have financing for free and additionally save 1.5% on purchased goods. Simple?

The first of above situations can be solved by dynamic discounting programs offered by financial institutions. While such providers of usually base them on the buyer’s financial surplus (your money), we engage our own funds to do so, giving you the opportunity to save on operating costs and generate additional profits at the same time. You invest your own funds in business development, which further increases the scale of operations and the possibility of achieving greater profitability

In case of second one we simply propose you to change perspective of valuating factoring for you – it doesn’t have to be only the cost-generator. There is plenty of advantages of such a facility, and getting the discount from you suppliers is one of them. Even if your cash flow doesn’t require any brush up, still you may use factoring to improve your results.

Greater availability

You do not need to have a financial surplus to offer suppliers a discount and benefit from discounts and a lower VAT tax base.

Pure profit

We propose a clear arrangement in which part of the commission for the discount is divided equally half and half. For example, with an annual turnover of PLN 60 million and payment terms shortened by 30 days, you can earn an additional PLN 50,000 per month – enough to pay the salary of at least several engineers! It all depends on what discount will be agreed with your supplier.

No risk

You do not engage your own funds in the repayment of your subcontractors/suppliers, but our capital, which is backed by a strong Italian banking institution @Banca Ifis.

Opportunity for development

Instead of financing current operations, such as bid bonds and advances, you can engage free funds in the development of the company, e.g. expansion of staff, vehicle fleet or machine park.️

Freedom of decision and planning

Your money, which you have been investing in faster payments to suppliers, can now be spent on what you have had to wait for – new machines, increasing employment, acquiring new customers, advertising… You decide what will be good for your business!

Credibility

You don’t have to worry that the payment dates of your costs are due faster than your invoices – even if you have to wait for payment for the work/deliveries performed, you can freely offer your suppliers short deadlines for which they will be grateful to you