The complex of financial services which are rendered to you by bank in exchange for a debt receivable concession is called factoring. Factoring ВТБ includes following financial operations:

1. Insurance of untimely payments: in a case if the money was not received from the client in connection with its insolvency, the grace period for a payment adjourning is given to him.

2. Financing without pledge: the invoices which have been written out transferred to factoring to buyers are cashed and participate in monetary turnover.

3. Collection of indebtedness of debtors. The bank incurs an obligation to supervise credits of your debtors and to perform procedures on collection of indebtedness.

4. Management of debt receivables. The bank gives to the client audit of business reputation of your partners, monitoring condition of their debt receivable. It saves time for production concentration, sales and other profitable processes.

Factoring works as follows. You expose to the debtor the goods with payment on credit, and the bank pays advance payment at the rate to 90 % from the required sum. After a credit period the debtor transfers money for delivery of the goods to bank. The bank in turn lists a difference between the sum of advance and the required sum to you, a minus compensation to bank for factoring company.

Pluses of factoring that is the convenient form of financing of business without pledge, the superfluous obligations, an alternative management method monetary flows, risks and debt receivables. Besides, the factoring allows using ability to meet payments of buyers of the client for access reception to unlimited financial resources.

Factoring kinds

1. Factoring without recourse and with recourse.

Factoring without recourse. In case of untimely payment the company which is engaged in factoring, works with the debtor independently. The risk of non-payment accordingly lies on factoring company.

Factoring with recourse. The company incurs risk untimely receipts of money funds; however credit risks remain on the seller. If the buyer doesn’t pay in time, the seller returns factoring company means independently.

2. The open and closed factoring.

The buyer informs the debtor of participation in the factoring company transaction, performs payments into its account is a technique of open factoring.

At the closed factoring the seller has no right to inform the debtor about availability of the factoring agreement with bank.

3. Internal and external factoring.

If the seller and the buyer are residents of the different states the factoring is considered international or external; if the seller and the buyer are in one country it is internal.

Difference of factoring from the credit consists in an open entry to financial resources which is based on ability to meet payments of your debtors. Giving out the credit, the bank estimates ability to meet payments of the client, a beret as proof of its property. At factoring company realization, the client gets access to money, using not own means, and ability to meet payments of the buyers. Factoring stands out without pledge: the more the involved debtors, the above a financial limit of the client.

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