The importance of financial factoring in the COVID crisis 19
By: Luis Doporto Alejandre
Banco de México and other financial institutions have predicted that Mexico’s economic recovery would take the form of a “V” or a U “; however, a new study carried out by BBVA assumes that Mexico’s recovery will probably take the form of a square root (that is, with a significant drop for this year and a rebound for 2021).
The financial institution proposed two different scenarios: the first, with a drop in the GDP of 6 to 12%; and the second, a definitive drop of 12%. In the latter is where the recovery would occur until after 2025.
Faced with this economic problem caused by the COVID 19 Pandemic, several companies have begun to increase their debts. An example of this has been the company of Petróleos Mexicanos (Pemex). Pemex increased its debt during the crisis to 180, 535 million pesos in June. Just like Pemex, other large companies are in the same situation, and consequently, adjustments are being made to contracts and agreements with suppliers.
The financial outlook in Mexico, according to El Economista, has caused several companies to use their suppliers to balance the loss of income they have had in recent months. This is how the smallest companies have been the ones that have been in trouble against the stop in distribution.
When a company presents a lack of liquidity, it runs the risk of disabling itself by wanting to acquire inputs properly, having problems with payments and, in general, failing to prosper; therefore, it is always a good idea to invest and take actions that make you stand out and differentiate yourself in the market.
An enterprise faces challenges such as labor disputes, lack of competitiveness, insolvency, and in this case, non-payment to suppliers. To solve this, there are alternative mechanisms such as the purchase of a discount portfolio.
The discount portfolio purchase, or called financial factoring ’is a transaction in which a company sells its accounts receivable or invoices to a financial company so that this first company can receive money faster. In other words, this company would get the money faster than by waiting 30 or 90 days in which it would have collected it initially.
PR1ME Capital, in addition to offering other financial services, is also specialized in the factoring process. We make possible the short-term financing of companies that obtain prepayment of their accounts derived from credit sales they manage with their clients.
I make sure that Prime Capital collaborates directly and personally with our clients throughout the transaction process; from the beginning to the end, in order to make sure that the barriers with the banks are eliminated and that a healthy financial structure is generated, in order to ensure the future growth of the company that requests our professional guidance.
My experience as CEO and founder of Pr1me Capital has shown me that companies that use financial factoring achieve flexible and accessible financing; In addition, the company maintains the flow of operations by increasing the term of its accounts payable, and we make these invoices become liquidity so that it allows you and your company to continue promoting its growth and the generation of new projects.
“(At Pr1me Capital) we make these invoices payable become liquidity so that it allows you and your company to continue promoting their growth and the generation of new projects”, Luis Doporto Alejandre, CEO of Pr1me Capital.
If your company is currently in a difficult situation, consider new forms of financing and contact our team so that together we can find a solution to the problem.
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About the author: Luis Doporto Alejandre is the CEO and founder of Pr1me Capital. He studied law at Universidad Iberoamericana in Mexico City. He has a master’s degree in Business Law from the University “Panthéon Assas” in Paris. Luis Doporto Alejandre founded Pr1me Capital with strategic alliances with investment funds a consequence of his experience in the design and execution of transactions, Luis Doporto Alejandre decided to participate more actively in investment projects; and thus, with the purpose of institutionalizing the different businesses and investments that he had made throughout his career and with the idea of supporting the structuring of successful companies and supporting entrepreneurs to exploit their potential and promote easier access to capital.
DOPORTO PR1ME CAPITAL, is a sophisticated boutique that offers investment banking advice, with the main objective of generating value for its investors, partners and clients through the design, structuring and execution of financial profile transactions, whether debt or capital. DOPORTO PR1ME CAPITAL has participated as an investor and as an advisor in transactions for an estimated value of $9,000 million pesos. Currently, it has active investments in the engineering, energy, infrastructure, agri-food, agro-industrial, food, fashion, and pharmaceutical distribution sectors.