I understand you. You are a businessman gambling one hundred percent every day. What’s more, I’m sure that regardless of how long you’ve been in the business world, you’ve already learned one of the elementary truths: time is money.
And it is that, in the dynamic world of business, as in everything, if there is something that we cannot recover, it is just that: time; And in the case of small businesses in Mexico, every minute counts. For this reason, it is crucial to look for innovative solutions that help save time and increase productivity. One promising option is factoring; a form of financing that can provide significant benefits to SMEs. Do you know him?
What is factoring?
Factoring is a method by which businesses can raise immediate capital by selling their accounts receivable to a specialized financial institution, known as a factor. In exchange for a commission, the factor assumes the responsibility of collecting the accounts receivable and in this way, the company obtains liquidity quickly, effectively and without getting into debt.
Now, it is true that artificial intelligence (AI) is not yet directly related to factoring, but it is important to mention it as a complementary tool that can enhance the benefits of this financing option. Let’s see how:
1. Automating processes
Since we have talked about factoring, it seems important to mention how this type of financing can be even more efficient, and that is that AI can streamline and automate the processes involved, from evaluating accounts receivable to monitoring payments. This translates into efficiency and precision, and will be reflected in a release of time and resources.
2. Analyzing risks
Reliability in meeting your customers’ payments is essential. Let’s face it, your company depends on your customers paying you on time, and this is where AI can help in this area by analyzing large volumes of data and using advanced algorithms to assess the credit risk of debtors. This will allow you to more accurately identify the most secure receivables and minimize the risk of non-payment.
3. Optimizing inventory management
Inventories can be a headache, as they require accurate data management. Well, AI can use historical data and demand patterns to more accurately predict a company’s inventory needs. This is especially relevant in the context of factoring, as efficient inventory management can reduce the risk of having unpaid accounts receivable due to a lack of available products. Interesting, right?.
4. Making predictions
Did you know that AI can help predict the evolution of a company’s cash flow? This means you’ll be able to anticipate potential financial challenges, plan ahead, and make informed decisions about the financing options that best suit your needs.
5. Improving the relationship with the factor
Returning to the issue of factoring, AI can facilitate communication and the exchange of information between the company and the factor through chatbots or virtual assistants. In this way, you as a company can have quick access to answers and solutions to your queries, speeding up the factoring process and strengthening the relationship.
I could mention more examples, and surely, in the short and medium term, more tools supported by generative Artificial Intelligence will emerge. Like any transformation, it is important that you consider what your company needs right now, but also where you want to go in the coming years and start implementing tools that help you reach your goals.
The combination of factoring and Artificial Intelligence can be a powerful partnership for small businesses in Mexico if they take advantage of factoring as a financing option and the capabilities of AI to optimize processes and make informed decisions. In this way, SMEs can improve their cash flow, increase their productivity and strengthen their position in the market.
Claudio Kandel Claudio has also been director of financial products at Banco Azteca, director of credit risk and director of operations at HSBC, brand manager of “Western Union: Money in Minutes” at Elektra, among others. He has extensive experience in the financial sector, both in Mexico and the United States, Luxembourg, Russia, Switzerland, Israel, Guatemala, Panama, Honduras, El Salvador, Colombia, Peru, Brazil and Argentina.