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Shorter maturity of receivables and transfer of administration and collection tasks to the bank
Factoring is recommended for manufacturing and trading companies with high turnaround that need to provide short-term supplier credit and require a large amount of working capital.
Method of purchase
- Receivables are sold to the bank by means of an assignment for consideration.
- with recourse (recourse factoring) – if the customer does not pay by the end of the grace period (a period after maturity, mostly 60 days), the receivable is assigned back to the client
- without recourse (no-recourse factoring) – the bank assumes the risk of the debtor’s insolvency or delinquency to pay and insures the receivables with a credit insurance company with 10 % participation only.
- The bank buys 100% of the amount of receivables as specified in the invoice, incl. VAT; it provides clients with a contractual advance payment of 70% to 90% of the nominal value; the remaining part is credited to the client’s account immediately upon the payment being obtained from the debtor
- Secured funding improves your competitiveness
- Cash flow planning is more precise
- You can already use the money on the day on which the receivables are assigned
- You minimize the risk of exchange rate movements for receivables in foreign currencies
- No reservation fee is charged on the unused amount
- You will lower the cost of payments – no fees are charged for incoming payments
- The bank assumes the risk of non-payment of receivables
Contact details of our specialists:
603 808 945
724 625 806