Factoring of orders: still possible until December 31, 2021!

To support the cash flow of companies in this period of health and economic crisis, the public authorities have set up an accelerated factoring system.

Reminder: Factoring allows a company to submit its receivables to a specialized company, usually a financial institution (called a factor), which will collect the invoice payments from the company’s customer. The factor can even, according to what is stipulated in the factoring agreement, guarantee the payment of the invoices submitted to it or, better, make an advance payment.

In France, factoring is normally allowed only on invoices issued once the work is completed, i.e., goods were delivered or the service was rendered. With the introduction of the new system, companies do not need to wait for the delivery of goods/services and the issuance of the corresponding invoice. They may, on an exceptional basis, apply for financing from the factoring company as soon as an order is confirmed by a customer. In practical terms, it is sufficient to send to the factoring company the accepted quotation or to justify an awarded contract.

This early financing is possible thanks to the guarantee that the State provides to the operation.

Orders taken until December 31, 2021

This scheme, which had been extended for the first time for orders taken until June 30, 2021, is extended again for 6 months. It may therefore apply to the financing of orders taken until December 31, 2021.

In practice: to benefit from the accelerated factoring system, the company must sign a standard agreement with the factoring company under which, among other things, it guarantees that the order submitted to the factoring company for financing is firm and final, and that an invoice will be issued within 6 months after the date of the signing of the order.