Factoring and Dailly: what are the differences?

In a financial world that keeps evolving, it's hard to keep your head above water. Payment delays and unpaid bills threaten the accounting stability and growth of your company.

Faced with these difficulties, do you feel the stress setting in and don't know how to manage the situation? Rest assured, at Defacto, we can help you maintain a healthy treasury.

In this article, discover what factoring and Dailly are, how they work, the advantages and disadvantages of each, and why Defacto is a partner of choice to help you in managing your finance and optimizing your debt financing processes.

We present the two solutions available to you for financing your customer position: factoring and Dailly. We explain what these two methods consist of, what differentiates them and how to choose the one that best suits your needs.

What is factoring?

Factoring is a financing technique intended for businesses.

It is a practice that involves the transfer of commercial receivables to a financial company, known as a factor.

The company thus delegates the recovery of its invoices in exchange for an advance of funds. There are notable advantages to opting for this financing solution for your structure:

• You delegate all of your customer accounts to the factor, that is, you leave him in charge of managing recoveries.
• The factor deducts a withholding on each invoice, until reaching a certain amount. The fund, thus obtained, will be used for compensation in case of impossibility or delay of payment.

For each company and for each situation, there is a financing solution: I finance my growth online with Defacto.

What is Dailly?

The Dailly, named after Senator Etienne Dailly, the instigator of the corresponding law, is an interesting alternative to discounting.

It allows you to sell all your commercial receivables to a banking institution, in exchange for an equivalent advance payment.

It's a method that allows companies to be paid quickly in exchange for financial compensation. The transfers are carried out via receipts, called daily collections.

It is important that the form mentions professional receivables, the name of the credit institution, and the designation of the assignment. The characteristics of the Dailly method are as follows:

• Unlike factoring, it's a financing only offered by banks.
• It's essentially a temporary bank overdraft. The bank advances you the money and you must repay within a previously defined period. The amount is negotiated every year, so it's a capped financing.
• You retain management of your customer position and invoice recoveries.
• You will not benefit from any guarantee retention. In case of default, you will still have to repay the bank the allocated amount.

The main differences between factoring and Dailly

Factoring involves a specialized financial company, often a subsidiary of a banking institution. By transferring their trade receivables to said company, businesses can receive up to 90% of the value of their invoices in advance.

Dailly, on the other hand, involves dealing with a bank. In this case, it is a receivables form, representing several invoices, that businesses can transfer, in exchange for immediate financing.

Unlike Dailly, which does not offer this kind of lending service, factoring can include insurance to protect against certain types non-payment (mainly bankruptcy)

Dailly requires a direct procedure with its bank. Dailly is often capped at a certain amount, which can limit the advance obtained, unlike factoring which offers more flexibility in terms of amounts financed.

According to statistics, the use of Dailly remains a more common practice although factoring is experiencing faster growth.

When to choose factoring vs Dailly

Not all companies have the same expectations in terms of financing. The choice between factoring and Dailly assignment will depend on your specific needs.

Although they have distinct characteristics, these two methods have a common main objective: to provide you with financial input quickly.

Factoring and Dailly are effective ways to quickly convert your receivables into cash. Thus, you are protected against the problems caused by delays in payment from your customers.

Factoring has the advantage of offering you protection against some non-payment risks thanks to the credit insurance option. This service is not available with Dailly.

Characteristics of factoring

Factoring is a solution to your cash flow problems. This method also allows you to completely outsource the management of your customer account. Indeed, the factor will manage the recovery stages.

The downside to this may be a feeling of intrusion into your customer relationship.

Credit insurance is an interesting option to protect against money problems due defaults.

This method imposes handling fees on its customers, as well as a factoring commission and a financing commission.

Characteristics of the Dailly method

The Dailly involves negotiating directly with a bank that is willing to buy your receivables.

By resorting to the Dailly, keep in mind that the financed amount is capped, which can be restrictive for some companies.

No insurance is provided in case of problems with unpaid amounts or late payments. You commit to repaying your bank, even if your customers do not pay.

The Dailly is a time-consuming method: it requires the use of slips or receipts for its transfers.

Why choose Defacto for your financing?

In a competitive economic environment, Defacto presents itself as the ideal financial partner, offering tailored financing solutions that are modern and flexible to meet the needs of businesses. By providing you with a fully online service, we simplify the financing process for your company, allowing you to better focus on its development.

We have distributed over 370 million euros in short-term financing in two years since our launch

Many companies, including Comet, Qonto, ByCharlot, and Ooshot, have used our solutions. The satisfaction rate of our clients attests to our efficiency and the reliability of our services.

At Defacto, we have redefined short-term financing to make it more accessible and customer-centric. As short-term financing experts, we have simplified our process to meet the needs of the largest number of companies.

With Defacto, there's no need to get bogged down with administrative formalities! 100% online, our platform connects directly to your billing and accounting tools, as well as to your bank.

An eligibility test, which will not take more than a minute to complete, will give you an immediate response regarding your eligibility for financing.

In addition to being fast, our financing journey has been designed to be pleasant and easy to use.

Defacto values and respects your customer relationship standards, which we do not interfere with. That's why we do everything we can to maintain total transparency throughout the financing process.