More and more mid-sized companies are expecting cash flow bottlenecks - despite healthy order books. A recent survey in the metal and electrical industry shows: Two out of three companies expect a strained or very strained liquidity situation over the next twelve months. This article looks at which specific tools CFOs can use right now - from factoring and forfaiting to consistent dunning, leasing and sale-and-lease-back - and how renz credit & consulting (rcc) supports companies in implementing them.

1. Liquidity in the Mid-Market: What the Latest Survey Really Shows

The survey commissioned by Close Brothers Factoring among 200 companies in the metal and electrical industry paints a clear picture of the market situation.

1.1 Growing Pressure on Cash Flow

63.5% of the industrial companies surveyed expect a strained (55%) or very strained (8.5%) liquidity situation in the coming months. Only 8% expect no liquidity pressure at all. This is remarkable, as many of these businesses are considered solid and well-financed by banks.

According to the study, the main drivers of the expected bottlenecks are:

  • Revenue declines due to weakening demand (35%)
  • Rising personnel costs (34.5%) and higher raw material prices (34%)
  • Revenue losses caused by supply chain disruptions (29.5%)
  • Payment delays (27%) and bad debt losses (22.5%)

As a result, risks are shifting from profitability to financing: margin and cost pressure are directly impacting companies' ability to pay.

1.2 Which Measures CFOs Are Prioritizing

The same survey shows how companies plan to respond:

  • 77% of companies are planning targeted measures to improve liquidity over the next twelve months
  • The most frequently named tools:
    • Sale-and-lease-back models (46%) - i.e. the sale and leaseback of fixed assets
    • Factoring (43%)
    • A consistent dunning process including lawyers/collections agencies (41.5%)
    • Sale of fixed assets (41.5%)
    • Loans (41%)

Companies are no longer relying solely on their principal bank, but are increasingly turning to alternative financing and professional receivables management.

Industry figures show that these tools have become mainstream:

  • In 2024, the total volume of the German factoring industry was around €398.8 billion - an increase of roughly 3.7% compared to the previous year.
  • The majority of factoring customers in Germany are from the mid-market.
  • Leasing financed SME investments of €61 billion in 2024, around one quarter of total SME investment volume.

The core message: anyone who wants to safeguard liquidity can hardly avoid a well-thought-out mix of instruments.

2. Four Levers for Crisis-Proof Liquidity in Mid-Sized Companies

2.1 Factoring & Forfaiting: Turning Receivables into Cash

Factoring means selling your trade receivables to a factor. The factor pays - minus a fee - most of the invoice amount up front, usually 80-90%.

Factoring provides three key functions:

  • Financing: Immediate liquidity instead of waiting for payment terms to expire.
  • Credit risk assumption: With "true" factoring, the factor assumes 100% of the default risk.
  • Service: Depending on the model, the factor takes over accounts receivable accounting, dunning and collections.

Typical use cases:

  • Rapidly growing business with long payment terms (e.g. 60-120 days).
  • High B2B share in trade, manufacturing, logistics or services.
  • Tight overdraft facilities with the principal bank.

Forfaiting is factoring's "sister instrument" for individual, larger or medium- to long-term receivables (e.g. export transactions, capital goods projects). A specific receivable is sold without recourse - often secured by bills of exchange, guarantees or trade credit insurance. Forfaiting is relevant when:

  • You have large contracts (e.g. machinery, plant engineering) with long payment terms.
  • Foreign or political risks need to be covered.

renz credit & consulting provides comprehensive advice on factoring, forfaiting, leasing and purchase financing, and develops tailored working capital concepts. Learn more on the page Factoring, purchase financing and project financing.

Advantages of factoring & forfaiting at a glance:

  • Liquidity grows in line with sales ("breathing" financing).
  • Balance sheet ratios improve (receivables fall, equity ratio rises).
  • Receivables default risks are transferred.
  • Receivables management can be fully or partially outsourced.

2.2 Securing Receivables: Trade Credit Insurance as a Safety Net

While factoring sells receivables, trade credit insurance ensures that if a customer fails to pay - for example due to insolvency or persistent default - you receive compensation for the majority of the receivable.

A trade credit insurance policy protects receivables from the sale of goods and services and, in the event of a claim, usually indemnifies up to 90% of the invoice amount. At the same time, the insurer continuously monitors the creditworthiness of your customers - an important early warning indicator in uncertain markets.

The number of corporate insolvencies in Germany has been rising steadily again since 2021. Structured receivables protection is therefore an active form of risk management.

Typical use cases:

  • A broad customer base with many open items.
  • International business with political risks.
  • Tight liquidity, where individual large defaults could threaten the company's existence.

Learn more on the page Protect receivables with trade credit insurance.

Combining with factoring: Trade credit insurance and factoring can often be intelligently combined - for example by integrating an existing credit insurance policy into a factoring concept. This creates a particularly robust protection and financing framework.

2.3 Professionalizing Dunning: The Underestimated Lever

The survey shows that 41.5% of companies cite a more consistent dunning process - including lawyers or collections services - as a measure to improve liquidity. This is no coincidence: unstructured collection processes are among the biggest "silent liquidity killers" in the mid-market.

Typical weaknesses:

  • Varying payment terms and no clear dunning strategy.
  • Reminders are sent late or not at all, for fear of damaging customer relationships.
  • No clear separation between commercial dunning and escalation (lawyers/collections).

Modern dunning is characterized by:

  1. Standardized processes: Clear deadlines for payment reminders and dunning levels.
  2. System support: ERP or accounting systems that monitor due dates and trigger dunning runs.
  3. Data-driven prioritization: Focus on large balances and critical debtors, supported by business information and credit data.
  4. Clean handover to lawyers or collection agencies once internal measures are exhausted.

Factoring can also reduce the burden: with full-service factoring, the factor takes over receivables accounting, dunning and collections - freeing up time for the core business.

2.4 Leasing & Sale-and-Lease-Back: Investing Without Tying Up Liquidity

A 2026 KfW study shows how firmly leasing is established among mid-sized companies: In 2024, German SMEs financed investments of €61 billion via leasing - around one quarter of their total investment volume. Larger mid-sized companies are particularly likely to use it: 55% of businesses with at least 50 employees use leasing, compared with an SME average of 18%. At the same time, 32% of SME investment volume is financed by bank loans, which are used by 28% of companies.

Leasing preserves liquidity by spreading the cost of investments over recurring payments instead of paying in full upfront. Advantages include:

  • Predictable, regular payments.
  • Preservation of existing bank credit lines.
  • Often favorable structuring from a balance sheet and credit rating perspective.

Sale-and-lease-back goes one step further: existing, often fully depreciated fixed assets are sold to a leasing company and immediately leased back. This releases liquidity in the short term - without restricting usage.

The survey confirms the trend: 46% of the companies surveyed use sale-and-lease-back models to improve liquidity - more than any other instrument.

rcc helps companies integrate leasing and sale-and-lease-back solutions into their overall financing concept - often in combination with factoring or trade credit insurance.

3. Comparing Instruments: What CFOs Should Focus On

The following overview classifies factoring, forfaiting, trade credit insurance, leasing/sale-and-lease-back and bank loans in a structured way:

| Instrument | Primary lever | Typical use cases | Key advantages | Key questions to consider | |-----------------------------------|-------------------|----------------------| | Factoring | Liquidity + transfer of credit risk | Ongoing B2B receivables, long payment terms | Immediate liquidity, 80-90% pre-financing, 100% credit risk assumption (with true factoring), outsourcing of dunning/accounting | Does the receivables volume fit? Which debtors are suitable for factoring? What is the impact on the balance sheet and covenants? | | Forfaiting | Liquidity + transfer of credit risk | Single large receivables, exports, capital goods | One-off liquidity boost, coverage of political and country risks, balance sheet relief | Which security instruments (bills of exchange, guarantees, trade credit insurance) are available? How long is the term? | | Trade credit insurance | Risk mitigation | Broad customer base, many open items, international business | Protection against bad debts up to around 90%, ongoing credit checks, stronger negotiating position with banks and customers | Which customers should be covered? What is the insured turnover? What deductibles are appropriate? | | Leasing / sale-and-lease-back | Investment financing + preservation of liquidity | Machinery, vehicle fleets, IT, real estate; releasing tied-up capital | Preservation of credit lines, improved balance sheet ratios, flexible terms | Which assets are suitable? What is the balance sheet impact of the chosen structure (local GAAP/IFRS)? | | Bank loan/overdraft | Liquidity + investment financing | General working capital, investments, short-term peaks | Established instrument, often attractive terms for strong credits | How heavily utilized are credit lines? Which collateral is tied up by the loan? How flexible are terms and covenants? |

The critical success factor is orchestration: rarely is a single instrument the optimal solution - what matters is the right mix of receivables financing, receivables protection and investment-related financing.

4. A Practical 5-Point Checklist for Your Liquidity Strategy

4.1 Analyze the Status Quo: Understand Working Capital

Start with a clear assessment of your current position:

  • What is your average DSO (Days Sales Outstanding)?
  • How long do you hold inventory?
  • How quickly do you pay your suppliers (DPO)?

Working capital - receivables plus inventories minus short-term liabilities - is a key indicator of your financial strength. The goal: use suitable instruments (factoring, purchase financing, trade credit insurance, guarantees) to optimize net working capital.

4.2 Assess Receivables Risk and Payment Terms Differentiated by Customer

Not all customers are the same:

  • Segment your debtors by credit quality, revenue, margin contribution and payment behavior.
  • Define risk-based credit limits and payment terms.
  • Decide which segments should be covered by trade credit insurance and/or financed through factoring.

4.3 Define the Instrument Mix: Factoring, Forfaiting, Trade Credit Insurance, Leasing

Guiding questions for CFOs:

  • Where do factoring or forfaiting provide the greatest relief (for example seasonal peaks, export orders, large customers with long payment terms)?
  • Which parts of your receivables portfolio should be covered by trade credit insurance to cap concentration risks?
  • Which planned or existing investments can be financed through leasing or sale-and-lease-back to free up liquidity?

rcc supports companies in structuring this mix of instruments - independently, without predefined outcomes and with a broad view of the market.

4.4 Processes and Tech Ecosystem: Modernize Dunning & Financial Communication

A modern liquidity mix requires suitable processes and systems:

  • Integrate factoring and leasing solutions into ERP and accounting.
  • Implement automated dunning runs, e-invoicing and clear escalation paths.
  • Strengthen financial communication with banks and trade credit insurers to optimize ratings and terms.

renz credit & consulting also supports financial communication and the optimization of rating-relevant key figures. Learn more on the page Financial communication - optimize rating processes.

4.5 Use External Expertise: Independent Advice Instead of Product Pushing

The multitude of providers - banks, insurers, factoring and leasing companies - makes the market complex. An independent specialist broker such as renz credit & consulting:

  • Compares offers neutrally across the market.
  • Negotiates terms on an equal footing with insurers, banks and factors.
  • Supports implementation and day-to-day operations - including claims and limit issues.

You can get an initial impression on the homepage rcc: Broker + consultant for trade credit insurance + financing.

5. How renz credit & consulting Guides Companies Through the Financing Jungle

renz credit & consulting is an independent specialist broker for trade credit insurance, surety bonds, factoring and corporate financing with a focus on SMEs and mid-sized companies. Clients benefit from:

  • Independence & neutrality toward insurers, banks and factors.
  • A broad network of trade credit insurers, factoring companies, leasing providers and business information agencies.
  • Personal support from experienced contacts such as Heike Renz and Danny Jung.
  • Solution-neutral advice that focuses on your business model and liquidity goals - not on product sales.

Whether you want to evaluate individual components such as factoring or leasing, or develop a comprehensive working capital concept: rcc acts as a navigator in the offer jungle and as a long-term sparring partner for management and finance.

For a non-binding initial consultation, the easiest way is to get in touch directly via Contact renz credit & consulting.

6. Conclusion: Gain Planning Certainty Now - Before the Pressure Escalates

The data is clear: a large part of the industrial mid-market expects strained liquidity over the next twelve months - driven by falling demand, rising costs and growing default risk. At the same time, factoring, leasing and trade credit insurance have long been standard tools for successful companies.

For CFOs and management, this means:

  • Do not wait until payment defaults or delays force a crisis response.
  • Plan the right mix of instruments - factoring, forfaiting, trade credit insurance, dunning, leasing and sale-and-lease-back - strategically.
  • Involve independent experts to optimize terms and avoid pitfalls.

Those who act prudently today will gain room to maneuver tomorrow - for investment, growth and job security.

Frequently Asked Questions

How can I tell whether factoring is more suitable for my company than a traditional bank loan?

Factoring is recommended if you:

  • regularly sell on open account and grant long payment terms,
  • have fast-growing revenues and a tight overdraft limit,
  • want to transfer default risk and reduce the internal workload of dunning.

A bank loan typically secures a fixed amount over a defined term; factoring scales with revenue. The decision depends on your revenue profile, the credit quality of your debtors and existing covenants - rcc can support you in this analysis.

How does factoring affect my balance sheet and bank rating?

With true factoring, receivables are generally derecognized from the balance sheet and converted into cash. This can improve ratios such as equity ratio and leverage and positively influence your rating. Banks also see that you are actively managing receivables risk. It is important to coordinate the chosen structure (disclosed/undisclosed, true/non-recourse vs. recourse) with your tax advisor and, where appropriate, your principal bank.

Do I still need trade credit insurance if I already use factoring?

That depends on the setup:

  • With true full-service factoring, the factor typically assumes the full credit risk - an additional trade credit insurance policy is often unnecessary.
  • In other structures (e.g. recourse or in-house factoring, specific export scenarios), trade credit insurance can still be useful, for instance for customers that are not eligible for factoring or for political risks.

rcc assesses in each individual case how trade credit insurance and factoring can best be combined.

What size does a company need to be for factoring or forfaiting to make sense?

Factoring is already suitable for smaller mid-sized companies: typical lower thresholds are annual revenues of around €250,000-500,000; as revenues increase and the number of B2B debtors grows, the benefits become greater. Forfaiting is especially relevant for larger individual projects and export transactions where single receivables are substantial and have longer terms. What really matters is the structure and quality of your receivables portfolio.

How do I get started with a liquidity analysis and selecting the right mix of instruments?

A proven way to start is a short, structured assessment meeting with an independent advisor, where you:

  1. Review your current liquidity and working capital situation (DSO, inventory, credit lines).
  2. Assess risks and payment terms across your receivables.
  3. Explore scenarios using factoring, forfaiting, trade credit insurance, leasing and sale-and-lease-back.
  4. Evaluate the impact on your balance sheet, rating and processes.

renz credit & consulting offers a non-binding initial consultation for this purpose and answers many detailed questions in advance in the FAQ on trade credit insurance, guarantees & factoring.