Supply chain finance - factoring

Factoring is a type of banking service for financing Suppliers under the assignment to the Bank of the right to receive payment for accepted but unpaid payment claims for goods supplied, with/without the right of recourse.

Factoring services are provided to Suppliers or Buyers who have a primary or secondary demand deposit account with the Bank. The payer/buyer must have no overdue accounts payable, losses, illiquid balance, or the fact of being declared insolvent.

There are three types factoring options available, Classic, Reverse and Online factoring.

Classic factoring – the initiator of the transaction is the Supplier. The supplier approaches the bank with a request to pay off the debt incurred due to the supply of goods to customers. In this case, the Supplier provides a list of buyers to whom the goods were delivered.

Main terms and conditions:

Factoring period - no more than 180 days;
Factoring discount - (the difference between the amount transferred by the bank to the Supplier and the nominal amount of the payment request issued to the Payer) – from 2.5%

Reverse factoring - the initiator of the transaction is the Buyer. The buyer applies to the bank with a request to pay off the debt incurred by receiving goods from suppliers. In this case, the Buyer provides a list of suppliers from whom the goods were received.

Main terms and conditions:

Factoring period - no more than 180 days;
Factoring discount - (the difference between the amount transferred by the bank to the Supplier and the nominal amount of the payment request issued to the Payer) – from 2.5%
Online factoring – this banking product is provided in the form of Reverse factoring. In this case, all processes are carried out through an electronic platform, and the exchange of documents is carried out digitally. The platform allows you to sign all relevant documents via an electronic signature (e-imzo). Online factoring allows businesses to use factoring online.

Main terms and conditions:

Limit period – up to 12 months;
Factoring period - no more than 180 days;
Factoring discount - (the difference between the amount transferred by the bank to the Supplier and the nominal amount of the payment request issued to the Payer) – from 2.8%

Link to the site for registration on the platform

List of documents required to receive factoring:

Application for performing factoring operation;
Copy of the contract of sale (works, services) dully executed and signed by Supplier and Payer, to be verified with the original copy. The contract must include the term or the payment period;
copies of documents confirming the fact and reflecting the date of release of real assets (works performed, services provided), such as consignment notes, letter of attorney, acceptance certificates, certificates of reconciliation of mutual settlements between Supplier and Payer;
List of accounts opened by Payer in other banks;

Documents required for verification of the Payer’s financial condition, such as:

Accounting report for the last reporting period;
Profit and loss statement;
Cash flow statement, certificate on availability of financial obligations;
Interpretation of the accounts receivable and payable with the dates of their occurrence;

Accounting documents that reflect the frequency, volume of products delivered and settlements made between Supplier and Payer