An IT company in Pune used factoring to raise to 85% of the invoice value within a few days to fulfill new orders despite a working capital gap. Discover how this funding solution enabled smooth operations and rapid growth. And how we make factoring work easier in real business situations.
Factoring Finance Case Study
Factoring finance is an unsecured debt product. It is an excellent solution that efficiently manages each phase of the process. Let us examine the effective implementation of the Factoring Case Study in Ajit’s case.
A Case Study
Ajit Jain owns an IT Industry named ‘Info-Solution Pvt Ltd’ situated in Pune. His Previous year’s Net Profit is Rs 9.2 Cr. He has been running this business since 2011. His business is transitioning into IT Services and is generating substantial profits. Since he always faces a working capital crunch, he constantly needs funds to run his company efficiently. He has recently provided software services of Rs. 20 lakhs to a renowned Company and has accepted the credit period of 60 days. Meanwhile, he has received another order for which he lacks funding. The new order amounts to Rs. 12 lakhs, which is again quite a huge order
Business Snapshots
Company Name | Info-Solution Pvt Ltd |
Commencement Year | 2011 |
Turnover | Rs 9.5 Cr |
Mortgage available | None |
Industry Type | Service Industry |
After analyzing the company’s balance sheet, he found that the company does not have any assets that can be given as collateral. Thus, helpless to secure funding. He is confused and unable to decide on the exact way for funding. While discussing with one of his friends, he came across Terkar Capital. That is one of the best funding solutions providers in India. Soon he fixed a meeting with us.
Input Analysis
Our team of experts examined the case and asked for the companies’ financial statements. After studying the financials, we decided to provide a Factoring Funding Solution to his company. The balance sheet had no assets for collateral but showed heavy accounts receivable, i.e., more than the required amount. Mr. Ajit was unaware of the concept of finance, like Factoring, and was content after getting assistance.
Factoring is a financial instrument or debtor finance in which the seller sells its accounts receivable to a third party called a ‘factor’ at a discount. There are three parties involved in such transactions: the customer, the debtor, and the factoring company. In simple words, it is the selling of unpaid invoices for the requirement of instant cash
Financial Analysis from the Input:
Financial Instrument | Factoring |
Total time for execution | 3-4 days |
Amount Disbursed immediately | 80-90% of the invoice amount (depends upon credit score) |
Lock-in period (credit period) | 60 days |
ROI | 5-15% |
Company ratings for services | 4.5/5 |
(Note- The ROI varies as per the market conditions)
We chose the most suitable Lender and forwarded the required documents of the customer to them. Soon, they transferred 85% of the invoice value as their debtor was creditworthy. After the said credit period, the debtor executed the payment, and Mr. Ajit received the remaining amount less their discount/fees. Although there are discounting charges/fees for factoring, they provide around 80–90% of the cash instantly. The amount depends upon the creditworthiness of the debtor, as he will be the responsible person for payment at maturity.
Apply for Factoring Funding here.
Factoring Funding Solution at Terkar Capital
Once the proposal was put in by the borrower, we executed it thoroughly. Our team of experts arranges suitable funding options and executes the process effortlessly. Since then, Mr. Ajit has approached us for all his funding from us. Factoring Funding is a top solution for businesses, providing comprehensive organization throughout the process. Our Factoring Case Study offers valuable insights into real-world scenarios and success stories.
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