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Factoring

Factoring. Aliona Yeremeyeva.

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Factoring

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  1. Factoring AlionaYeremeyeva

  2. Factoring appeared about 100 years ago in the U.S., and in the middle of XX century - in Europe. Now an international factoring industry is rapidly developing: in the world there are about 1000 of factoring companies. About 66% of their turnover is in Europe, 22% - the U.S., 11% - in Asia.

  3. Factoring - What is it? • Factoring (from factor – mercantile agent) is a sort of trade-commission operation which is combined with crediting of Client’s circulating capital. It is based on purchase of Client’s invoices by factoring company on special terms. • Modern factoring is a complex of financial services provided to the Client by the Factor in exchange for the assignment of accounts receivable. It includes the financing of good’s supplies, credit control and acceptance of credit risk, accounts receivable ledgering, control of payments collected from the Debtors etc.  

  4. How does it work? 1. The supply of goods on open account terms. 2. Assignment of accounts receivable. 3. Provision of finance advance at the rate of 70-90 % of the invoices’ face value. 4. The Debtor makes payment to Factor (100% of the invoices’ face value). 5. Commission for factoring financing provided and accounts receivable ledgering. 6. The remittance of remainder (30-10% of the invoices’ face value).

  5. Total factoring volume in EU

  6. Factoring has the following advantages: • The enterprise is able to finance working capital without collateral (pledge); • Factoring accelerates the turnover period of cash; • Compared with the standard credit products, such as overdrafts, factoring allows you to get up to 90% of the delivered goods (future revenues). • Factoring is an opportunity to provide more advantageous (competitive) conditions of payment to its debtors (customers). • Thanks to factoring status of accounts receivable customer is improving.

  7. Factoring in Ukraine In Ukraine factoringservicesoffersabout 34 banks.  The volume of factoring services in the domestic market is growing dynamically. The main operator market is factoring «Укрсоцбанк», «Укрэксимбанк», «PrivatBank», «Swedbank», «Raiffeisen Bank Aval».The first three leaders took a 60-65% market share.

  8. Prospects Factoring for banks and factoring companies is another profitable "niche", which is just beginning to develop in our country. And considering the demand for such services, factoring has very good prospects for development.

  9. Thank you for your attention!

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