Invoice Factoring is a financial service where MODIFI purchases your issued invoices as a seller (exporter). This service provides you with two major benefits:
Immediate Cash: You get quick access to cash based on the value of your invoices, enhancing your liquidity.
Credit Protection: If your buyer fails to pay due to credit issues, you're protected because MODIFI assumes the credit risk.
How does this affect my company's finances?
Off-Balance Sheet Financing: This arrangement is considered a true sale of your receivables, meaning it's recorded as "off-balance sheet" finance. This is beneficial because:
It won't impact your company's debt ratios.
It doesn't affect your borrowing capacity from other financial institutions.
Accounting Benefit: In your accounting records, the value of the receivables is converted into cash without creating any liabilities, keeping your financial statements healthy.