The company burned 360 million in Euros cash in the quarter, and analysts noted that the total would have closer to 500 million had the company not stepped up factoring of receivables.
Whereas traditional pawn shops can charge upwards of 20% per month for a loan, online pawn shops charge as little as 2%, which is lower than other forms of alternative financing such as receivablesfactoring.
Eighteen months ago Pierce turned to an alternative form of financing called factoring--the process of selling receivables at a discount to raise quick cash.
Strictly speaking, a pure factoring arrangement has the supplier of funds acquiring the receivables, along with all the risks of nonpayment or late payment.