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Andrew Orlov

on 22 September 2014

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Transcript of Factoring

Foreign experience
The total turnover for the factoring and commercial finance industry across the EU in 2013 was 1.26 Trillion Euros. EUF Members represented over 97% of the turnover in the EU with the top five countries making up nearly 80% of the total market. The factoring industry turnover represented 9.6 % of EU GDP in 2013.
European statistics
Total Factoring Volume in EU in 2013
Ancient Rome
(19th century)
(16th century)
Why we need factoring?
For Smooth cash flow

For meeting working capital needs

Overcome the situation from high cost of capital and reduced profit
Ukrainian experience
Factoring market is quite young in Ukraine and begins its development in 2001, when the first such operation conducted "Ukrsotsbank", the activity of which is within several years accounted for a third of all transactions by factoring in including this particular bank offers services in the international factoring. Part of the market belonging to other banks not and greater than ten percent, excluding Bank "TAS- Commerzbank ", which became a full-fledged competitor to the founder Factoring in Ukraine. A few years ago factoring was doing almost by all rating Banks of Ukraine in any volume. Also, the rapid rate of growth of factoring was an important characteristic of all market
Ukrainian statistics
Sources of funding awarded factoring million. UAH
Funding Process
Fax the copy of invoice to factor
Factor processes the invoice
Get up to 80% of the invoice in 24 hours
20% kept in reserve account
Factor receives the payment from customer
Factor deducts fee from reserve account
Factor forwards the balance from reserve
Factoring is defined as a continuing legal relationship between a financial institution and a business concern, selling good or providing services to trade customers on open account basis whereby at the Factor purchases the client book debts
Factoring functions
It is a purchasing & collection the client's a/c's receivables (with or without resources),
Sales Ledger management
Credit investigation & undertaking of risk
Provision of finance against debts
Rendering consultancy service
Produced by
Andrew Orlov
Dmitriy Natalchenko

Customer pays
Monthly statements
Client submits invoice
Deliver of goods
Order placed
Payment of Commission Stage VIII
Factoring Services - Concept
Payments Stage VII
Stage VI
Copy Invoices Stage IV
Copy Invoice Stage II
Goods and invoices – Stage I

Statements Stage V
Import Factor
Prepayments Stage III
Export Factor
Country B

Country A

Present day
1) Why we need factoring?
2) Historical aspects
3) Factoring functions and service concept
4) Funding process
5) Types of Factoring Services
6) Two-Factor System of Factoring
7) Foreign experience
8) Ukrainian experience
9) Conclusions
Types of Factoring Services
International Factoring
Done with exporters
Facilitated with the help of export factor and import factor

Agency Factoring
Factor and Client share the work
The Factor has to provide finance and assume risk
Invoice Factoring
Only provides finance against invoices
All other works have to be done by clients

With Recourse Factoring
Factor does not assume credit risk
If debtors not paid, clients have to take the work for collection

Full Service factoring or w/o recourse factoring
Standard Factoring
Factor Assumes Credit Risk
Maturity Factoring
Collection Factoring
Paid to clients only when factor gets money

Bulk Factoring
Disclosed Factoring
Provides Finance after disclosing the fact of assignments

Dynamic of factoring services market in 2011 – 2013
http://www.fci.nl/* mln of euro
Financial Services
Collection Service
‘Credit Risk’ Service
Provision of expertise ‘sales ledger management’ service
Consultancy service
Economy in Servicing
Off-balance sheet financing
Trade Benefits
Miscellaneous service

Two-Factor System of Factoring
Full transcript