Understand how unpaid invoices become working capital.
DKS Dienstleistungs-Kontor Süd GmbH publishes clear, structured information about factoring and receivables financing for businesses in Germany and across Europe — how it works, where it fits, and what to consider before approaching a provider.
This website is an informational resource. It does not sell financial products, process applications, or make credit decisions.
What is factoring?
Factoring is a form of receivables financing in which a business sells its outstanding invoices to a third party, known as a factor, in exchange for an advance payment. Instead of waiting the standard 30, 60, or 90 days for a customer to pay, a company can access a large share of the invoice value shortly after it is issued.
The factor then collects payment from the end customer when it falls due. Depending on the arrangement, the factor may also take on the risk of non-payment, handle collections, or simply provide financing against the value of the receivables. The right structure depends on the size of a business, its customer base, and its appetite for outsourcing collections.
The main structures explained
These are the common approaches used across the industry. Each has distinct implications for cost, control, and risk — this overview is general information, not a recommendation for any specific arrangement.
Recourse factoring
The business retains the risk of customer non-payment. Typically the lowest-cost option, suited to companies with reliable, creditworthy customers.
Non-recourse factoring
The factor assumes credit risk on approved invoices, offering more protection against customer insolvency in exchange for a higher fee.
Invoice discounting
Financing is provided against unpaid invoices while the business continues to manage its own sales ledger and collections, kept confidential from customers.
Reverse factoring
Initiated by a large buyer to let its suppliers receive early payment on approved invoices, financed through the buyer's banking relationships.
How a typical factoring arrangement works
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01
Invoices are submitted
The business delivers goods or services, issues an invoice to its customer, and submits a copy to the factor.
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02
Verification takes place
The factor checks the invoice and, where relevant, assesses the customer's creditworthiness before agreeing terms.
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03
An advance is paid
A percentage of the invoice value, commonly 70–90%, is paid to the business shortly afterwards.
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04
Collection and settlement
The customer pays the invoice on its due date. The factor releases the remaining balance, minus its agreed fee.
Reasons receivables financing is considered
Improved cash flow
Reduces the gap between issuing an invoice and receiving payment, which can ease pressure on day-to-day operations.
Growth support
Financing scales with sales volume, which can suit businesses growing faster than their cash conversion cycle allows.
Administrative relief
Some arrangements shift invoice tracking and collections work away from internal finance teams.
Have a question about receivables financing?
Reach out and our team will point you toward the right information.