Factoring is a modern financial tool which represents an alternative to bank credit for its users. Accounts receivables, which arise to the user of factoring from the supply of goods or services, are the source of financing. Their maturity is usually between 30 and 120 days. Exceptionally, it can reach up to 180 days.
Client agrees that some or all accounts receivables for selected customers will be assigned to the factoring company. The factoring company provides advance payment in the amount corresponding to the agreed proportion in the agreement. After the payment by the customer to the bank account of the factoring company the transaction is settled and the client receives the remaining value.
Accounts receivables are assigned to the factoring company. In addition to the financing, it also ensures management and collection of accounts receivables for factoring users and range of services up to assuming the risk of default due to insolvency or protracted default of individual customers. It is usually a long term cooperation, not a one-time interaction. The funds that the factoring user would have tied up in receivables are continuously at their disposal thanks to this product.
Criteria for factoring
- accounts receivable must be assignable and collectable
- minimum annual turnover through factoring in amount of CZK 10 million
- continuous deliveries to regular buyers
- company with at least one year history
- continuous accounts receivable assigning
- payment conditions – to an open account
How to do it
- based on negotiations with Factoring KB filling in the application form for factoring services including the specification of customers proposed for factoring cooperation
- presentation of necessary documentation by the applicant
- credit analysis and assessment of business case by Factoring KB
- conclusion of factoring agreement and immediate start of cooperation