Thousands of companies are faced with long invoicing due dates on a daily basis. This gives rise to a significant lack of economic liquidity with serious repercussions, especially in the case of SMEs. To overcome this issue, there are certain financial mechanisms such as factoring that allow businesses to collect in advance for a small discount. In other words, the company “sells” its invoice to a financial entity, which pays the outstanding amount immediately, with a discount (for example 90% of the sum due). The financial entity (usually a bank) subsequently takes charge of managing the collection with the end customer and receives this small percentage as a service commission (10% if we stick to the previous example).
Until now, this mode of funding, regulated by Law 30308 in Peru, has not worked quickly or more efficiently for businesses. The problem is that the traditional procedure is long and complex. Companies so far have needed to physically take their billing to the bank on paper. Then, the entity has to validate the document’s authenticity, something that is not easy, as paper can easily be falsified.
In this sense, electronic billing is a great ally to help overcome these obstacles. Thanks to this technology, businesses can exchange their invoices with the bank online. Moreover, financial entities require less effort to check the validity of documents, which can be verified through authorized systems. This makes factoring a much quicker and simpler administrative procedure.
But beyond these advantages, unlike the traditional process, e-invoicing imposes no physical limits on factoring. This means that Peruvian companies can negotiate their invoices with institutions anywhere in the world and thus achieve more affordable interest.