The use of factoring to obtain the cash needed to accommodate a firms immediate cash needs will allow the firm to maintain a smaller ongoing cash balance.
A typical design for a cash balance plan would provide each worker a hypothetical account and pay credits in the current year of say 5% of current salary.
Increasingly these plan types are also being implemented in combination arrangements for greater contribution potential, such as the pairing of a cash balance plan with some variety of 401(k).