Understanding Factoring: Boosting Business Liquidity for Companies in Peru

In today’s economic environment, Peruvian companies face constant challenges in maintaining a healthy cash flow that allows them to operate, grow, and respond with agility to new opportunities. One of the most effective and growing financial solutions to meet this need is factoring. This mechanism has gained significant relevance in Peru as a fast, flexible, and secure alternative for obtaining liquidity without resorting to traditional loans. In this article, we explore what factoring is, how it works in the Peruvian context, and why it can be the key to your business’s financial development.

What is Factoring?

Factoring is a financial service through which a company transfers its accounts receivable (such as invoices issued to clients) to a financial entity or factoring company in exchange for receiving an immediate percentage of the value of those invoices. This operation allows companies to have immediate liquidity without waiting for the payment terms established with their clients.

There are two main types of factoring:

• Factoring with Recourse: The risk of non-payment remains with the company that assigns the invoice. If the client does not pay, the company is responsible.
• Factoring without Recourse: The factoring company assumes the risk of the client’s non-payment, offering greater security to the assignor.

How Does Factoring Work in Peru?

Factoring in Peru has been strengthened by the digitalization of payment receipts and the regulation of the Negotiable Invoice (Factura Negociable), which allows electronic invoices to be traded as securities.

The general process is as follows:

1. The company provides goods or services to its client and issues an invoice.
2. This invoice is registered as a negotiable invoice (via SUNAT, if electronic).
3. The factoring company analyzes the invoice and the end-client’s creditworthiness.
4. If approved, the factoring company disburses a percentage (e.g., 90%) to the assignor.
5. Upon maturity, the client pays the factoring company directly.
6. Once the payment is received, the remaining balance is delivered to the assignor, minus service commissions and costs.

Practical Example: A company sells products to a supermarket chain for S/ 50,000 with a 60-day payment term. Instead of waiting two months, the company turns to a factoring company, which advances 90% (S/ 45,000) immediately. At maturity, the supermarket pays the S/ 50,000 directly to the factoring company, which then delivers the remaining S/ 5,000, minus a small commission.

Benefits of Factoring for Peruvian Companies

• Improved Cash Flow: Immediate liquidity allows companies to cover operating expenses and invest in growth without setbacks.
• Reduced Non-Payment Risk: In “without recourse” factoring, the provider assumes the credit risk, providing financial safety.
• No Debt Generation: Unlike a bank loan, factoring is not recorded as debt because it is based on the sale of assets (accounts receivable).
• Time Savings in Collection Management: Many providers also handle the collection process, allowing you to focus on your core business.
• Better Negotiation with Suppliers: Increased liquidity allows for early payment discounts and better commercial terms.

Which Companies Can Use Factoring in Peru?

Factoring is especially valuable for:

• SMEs: Who sell to large clients and need constant working capital.
• Exporters: Who require immediate funding while waiting for international payments.
• Service or Manufacturing Firms: Companies operating with long collection cycles.

In Peru, growth has been driven by the ability to trade electronic invoices through digital platforms without the need for traditional collateral or guarantees.

How to Choose a Reliable Factoring Company in Peru?

When selecting a provider, consider:

• Transparency: Clearly defined commissions, terms, and processes.
• Market Experience: A proven track record ensures more efficient service.
• Personalized Attention: Providers who understand your specific industry can offer tailored solutions.
• Secure Digital Platforms: Tools that allow for agile management without complicated paperwork.

Factoring is a strategic tool for Peruvian companies seeking to strengthen their liquidity without debt. Whether to manage seasonality, finance growth, or improve financial health, it is a modern and effective solution.

At PAN AMERICAN Financial Services, we support you through this process with personalized advisory and a digital platform designed to provide the liquidity you need when it matters most. Start transforming your accounts receivable into growth opportunities today.