Factoring

The bank purchases your short-term receivables from buyers/debtors based on the documents proving the accounts receivable (invoices, delivery notes, temporary and similar).

The procedure is a very simple one. A factoring agreement is concluded according to which you have sold to the bank your receivables arising from the delivery of goods and/or services provided and you immediately receive the money.

Factoring may be realized in several ways:

• Factoring with a discount – financing is performed by immediately paying to your account the total value of the invoice reduced by the discounted amount
• Factoring with advance payment – the agreed amount of advance payment is immediately paid to your account (usually 75–95% of the invoice value), reduced by a factoring fee. The remaining portion of the invoice value, reduced by a factoring interest calculated on the advance amount, is paid to your account after invoice maturity i.e. after the debtor settles their obligations.
• Discounting of instalments per payment cards prior to maturity BIB – an “advance payment” (discounting) per instalments arising from sale in payment card instalments prior to maturity, whereas payment cards were issued by the bank.

Factoring sector may disburse a loan based on the accounts receivable, assigned receivables, leases, pledges, promissory notes, as follows:

• Loan based on the assignation of receivables: a placement with regards to which the collection instrument may be based on a cession, pledge of receivables, currency promissory notes
• Loan based on accounts receivable: a placement disbursed on the basis of expected inflow from existing or future receivables.

There are many advantages of factoring:

1. Liquidity:
By advance payment of the agreed amount of asset in a very short period of time, the liquidity of your company is significantly improved, enabling you to settle your obligations towards vendors sooner and utilize possible discounts they offer.

2. Creditworthiness:
By transforming short-term receivables into liquid assets, factoring as a means of financing does not burden your company’s balance.

3. Management of accounts receivable:
Considering that the bank undertakes to carry out all activities related to booking and monitoring of invoice maturity, you considerably save time and reduce expenses.

4. Collection
Debtors/buyers are much more disciplined in settling their obligations when the receivables are claimed by a strong bank.

5. Competitiveness
The transfer of receivables reduces risks related to their collection and increases liquidity, enabling you to offer your buyers longer payment deadlines and to increase your sales.

For more information, contact your client manager or call:
011/201-1629 or 011/201-1621.