In our work, we find that many people confuse these two concepts, which is partly understandable, as they do have some common points, but they are solutions for different business pain points. In this summary, we will clarify this in a concise and understandable way so that entrepreneurs know when and where to turn.

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To start with, here is a diagram summarising the ideas that follow:

In times of crisis, the use of a professional receivables management solution often becomes more valuable, as it is in the best business interest to get paid for the work you do and keep your company financially healthy.

Factoring

• Also known as: sale of an expiring (not yet expired) customer account,
• Can be considered before the expiry of the customer invoice
• Fees: a certain percentage (usually around 0.3-2% of the gross bill value) is charged by operators at the time of sale.

When should I choose this?

If you have issued the invoice but you don't want to or can't wait 30/60/90 days for the buyer to pay, factor the invoice.

Who can I contact?

There are different companies offering factoring services, but we recommend the modern Flexibill where you can do everything online and very easily if you want to factor.

Claims management

• Also known as: recovery, receivables management, overdue invoice management, unpaid invoice management
• Can be considered after the expiry of the customer invoice
• Fees: there may be elements of a success fee or upfront fixed start-up fees

When should I choose this?

If you've done the work, issued the invoice and the deadline has passed, but you still haven't been paid, then it's claims management.

Who can I contact?

For law firms, traditional debt collectors, notaries, or if you want to do everything online and in one place, come to us 😊

Recovery does not equal enforcement. Enforcement is an instrument of the state, carried out by bailiffs who can, for example, legally collect. Enforcement can be a stage in the recovery process.

In a nutshell:

• Factoring before maturity, claims management after maturity.
• If you have issued the invoice but you don't want to or can't wait 30/60/90 days for the buyer to pay, you can factor the invoice, i.e. factoring.
• If you've done the work, issued the invoice and the deadline has passed, but you still haven't been paid, then it's claims management.
• Today you can do everything online, as there are fully online services for both.
• Liquidity, the financial fitness of your company, is an extremely important area, and you should know when and what instruments to use.