Factoring or Dailly assignment: which receivables financing

Quick answer. Factoring and the Dailly assignment both turn trade receivables into immediate cash, without waiting for the due date. Factoring entrusts the receivables function to a factoring company that finances, collects and often guarantees against unpaid invoices, for a management commission plus a financing commission. The Dailly assignment (art. L313-23 of the French Monetary and Financial Code) assigns professional receivables to your bank, more flexible and one-off, with no delegated management and at the cost of interest. The choice depends on the need for service, the full cost and control of the customer relationship.

When payment terms weigh on your cash, mobilising trade receivables is a fast lever: you collect today an invoice due in 30, 45 or 60 days. Two tools dominate this short-term financing: factoring and the Dailly assignment. They answer the same need, turning an invoice into cash, but rest on very different legal mechanics and costs. The right choice is never made on principle: it depends on the structure of your receivables, your exposure to unpaid invoices and your need for flexibility. Here is how to decide.

Both schemes start from a common principle: assign a receivable to be paid right away, rather than wait for the due date set by your terms of sale. That due date is itself regulated: between businesses, the payment term cannot in principle exceed 60 days from the invoice date (art. L441-10 of the French Commercial Code). A term of 45 days end of month remains possible, but only if it is expressly stipulated in the contract and does not create an abusive imbalance to the detriment of the creditor. The longer the term, the greater the need to mobilise receivables becomes.

The difference between the two tools lies in two things: the nature of the assignee and the scope of the associated services. Factoring rests on a specialised factoring company, most often a subsidiary of a banking group, which buys all or part of your receivables function over time. The Dailly assignment relies on your bank, within a precise legal framework: the assignment of professional receivables carries a genuine transfer of ownership of the receivable to the bank, not a mere security interest. It is this transfer that secures the financing.

Mobilising receivables relieves cash without adding to structural debt the way a classic loan would, which usefully complements the analysis of your self-financing capacity and your working capital requirement.

Factoring is a global scheme that goes beyond financing alone. You entrust your invoices to a factoring company which, depending on the contract, performs three functions: it advances the funds (often within 24 to 48 hours), it handles collection from your customers, and it guarantees against unpaid invoices up to a limit granted per customer (the credit insurance attached to the contract).

It is an outsourcing of the receivables function, relevant for a company wanting to delegate management and protect itself against a debtor's default. In return, the cost has two components: a factoring commission (which pays for management and the guarantee) and a financing commission (the equivalent of interest on the funds advanced). A guarantee fund retained by the factor and returned at the end of the relationship usually adds to this. The scheme runs over time and often assumes a volume commitment. The detail of how it works and its cost structure is covered in our dedicated article on factoring for micro-enterprises and SMEs.

One sensitive point: in classic factoring, it is your customers who receive the factor's reminders. This may be well received (a professional third party handles collection) or poorly perceived (a sense of cash strain). Confidential formulas exist to preserve your image, but they raise the cost.

The Dailly assignment is a lighter banking mechanism, framed by articles L313-23 and following of the Monetary and Financial Code. You assign one or more receivables to your bank by an assignment slip, dated and signed, in exchange for advance financing. The bank credits the amount to your account, subject to an authorised outstanding limit negotiated in advance.

Unlike factoring, there is no management service or delegated collection: you keep control of your customer relationship, you do the chasing. The Dailly assignment is often used case by case, for specific and significant receivables, which makes it more flexible but also less complete. The unpaid-invoice guarantee is in principle not included: if your customer does not pay, the bank can turn back to you (except for a rare and costly non-recourse assignment).

This is the criterion owners look at first, and also the one where the headline figure is most misleading. No rate is universal: everything is negotiated according to the volume assigned, the average invoice size, the quality of your customers and your sector. Here, nonetheless, are the orders of magnitude we observe, to be confirmed in each proposal received.

These ranges are indicative and every rate remains to be checked against your real proposal. Two readings matter. First, the factoring commission pays for a service (collection, guarantee) that the Dailly assignment does not include: comparing the two on the financing rate alone distorts the analysis. Second, these financings should be compared with the cost of a prolonged overdraft, whose interest frequently exceeds 10% a year: mobilising a sound receivable is often more efficient than drawing lastingly on the overdraft facility. To calibrate these trade-offs, the resources of the Banque de France and Bpifrance Création on financing the receivables function are reliable benchmarks.

A frequent question, with a reassuring answer in the common case. For an ordinary trade receivable, already recognised in the accounts because the sale or service has been invoiced, the Dailly assignment is not in itself a taxable event. The turnover has already been recognised and taxed when the invoice was issued; the financing received from the bank is merely a cash advance backed by that receivable, which leaves the assets when it is assigned. You realise no new income or gain simply from the assignment (art. L313-23 and following of the Monetary and Financial Code for the mechanism).

The associated costs follow the usual regime: factoring commission, financing commission and interest are financial expenses deductible under ordinary conditions, just like the interest on a loan. The vigilance concerns special cases: assigning a receivable that is neither certain nor liquid, or a future receivable not yet recognised in the accounts, may receive a different treatment and must be analysed separately. The practical rule: on the current receivables function, the assignment is tax-neutral; as soon as an atypical receivable is involved, have the accounting and tax treatment validated case by case, relying on the official guidance (BOFIP). That is precisely the scope we secure with our clients.

Our view: start from the receivables function, never from the tool#

In our files, the most common mistake is to choose the tool before analysing the need. We reason the other way. Factoring is justified when the receivables function is heavy, recurring and risky: many invoices, scattered customers, unpaid invoices to watch, an admin team already stretched. Delegating collection and guaranteeing against unpaid invoices then creates real value, which can cover the cost of the service. The Dailly assignment is justified when the need is one-off and concentrated: a few large invoices on solid customers, a temporary cash gap, a wish to keep control of the commercial relationship.

The total cost is always compared over the real period of use, not on an isolated operation. A Dailly financing rate may look lower, but if you have to bring all collection back in-house and provision the unpaid-invoice risk yourself, the saving is sometimes illusory. Conversely, paying a factoring commission on a sound, low-risk receivables function means financing a service you do not need.

The underestimated risk: dependency and exiting the contract#

One point owners rarely look at before signing: reversibility. A factoring contract runs over time, with a volume commitment and an immobilised guarantee fund. Exiting it is not immediate, and cash can tighten the day you take back a receivables function you have stopped managing in-house. The Dailly assignment, being more one-off, does not lock you in but consumes your bank limit: every receivable assigned reduces by the same amount your short-term financing capacity with the bank. Anticipating these two effects avoids replacing one cash problem with another.

What about reverse factoring? Do not confuse the two directions#

A confusion comes up regularly. Factoring and the Dailly assignment finance your trade receivables, that is, what your customers owe you. Reverse factoring works the other way: it is a scheme by which a financier pays your suppliers in advance, to relieve your payables and secure your supply chain. One mobilises your future collections, the other organises your disbursements. If your cash strain comes from the terms you grant, look at factoring or the Dailly assignment; if it comes from the conditions imposed on your suppliers or the strength of their chain, reverse factoring is a separate debate, to be handled on its own.

A trading SME we support suffered 60-day customer payment terms that regularly tightened its cash. At first the need was one-off: two or three large invoices per quarter on solvent key accounts. The Dailly assignment allowed fast and flexible financing, without outsourcing the commercial relationship, at a controlled interest cost.

Then the business diversified towards a more numerous and scattered customer base, with unpaid invoices to watch and a growing admin burden. By rebuilding the full cost (time spent chasing, provisions for unpaid invoices, cumulative interest), the choice tipped towards factoring for the scattered part of the receivables function, the Dailly assignment remaining the one-off tool for key accounts. The two schemes coexisted, each on the segment where it is most efficient. That is exactly what we look for: financing calibrated on the reality of the receivables function, not a single solution imposed on principle.

In practice: securing the choice before signing#

• Map your receivables function: number of invoices, average amount, concentration, ageing of overdue items, past unpaid-invoice history.
• Cost the full price of each option over twelve months, including internal collection time and unpaid-invoice risk, not just the headline rate.
• Check the quality of the receivables assigned: a certain, due, undisputed invoice that has not already been pledged, failing which the assignment is fragile.
• Read the exit clauses, the guarantee fund and the volume commitment before signing a factoring contract.
• Preserve your bank limit: the Dailly assignment consumes it, anticipate the impact on your other short-term lines.
• Have the contract and the cost mechanics reviewed by your chartered accountant for business taxation, in particular the accounting treatment of the assignment and the guarantee.

• A disputed, already paid or contested receivable cannot be validly mobilised: the financing can be cancelled and the amount clawed back.
• Double mobilisation: a receivable already assigned under Dailly cannot be assigned to a factor, at the risk of legal disorder and repayment.
• The factoring guarantee fund immobilises cash: include it in the real cost, it is not neutral in the first year.
• The headline rate is not the total cost: commissions, minimum billing, file fees and the guarantee fund change the equation.
• The factoring unpaid-invoice guarantee is capped per customer: beyond the granted limit, the risk stays on you.
• In Dailly, the assignment "with recourse" is the norm: your customer's default remains your problem, do not confuse financing with insurance.

• Factoring is a full service (financing, collection, unpaid-invoice guarantee) over time; the Dailly assignment is flexible, one-off bank financing, with no delegated management.
• Cost is rebuilt over twelve months and on the full price: management plus financing commission plus guarantee fund for factoring, interest for the Dailly assignment, all to be compared with an overdraft.
• For an already-invoiced trade receivable, the Dailly assignment is tax-neutral; only atypical receivables (uncertain, future) call for a case-by-case analysis.
• Start from the receivables function, not from the tool: the two schemes can even coexist on distinct segments.