About purchase of receivables
Repurchase of receivables is an alternative form of financing receivables from the supply of goods or services provided. Receivables with short, medium or long-term maturities can be purchased, with a usual minimum maturity of 180 days. The maturity of receivables can be agreed on in the form of a fixed repayment calendar. The client is entitled to assign select receivables of the factoring company. It will usually provide funds against them in the amount of 100% of their nominal value in accordance with the terms of the framework agreement on the assignment of receivables for consideration.
Receivables are transferred to a factoring company, which, in addition to financing them, provides a range of services for factoring users in the area of debt management and collection, or only after assuming the risk of non-payment due to insolvency or reluctance of the respective customer. It is a product suitable for one-time and repeated transactions. Receivables can be purchased with or without recourse to the original owner of the receivable.
Criteria for purchase of receivables
- accounts receivable must be assignable and collectible
- one-time or repeated deliveries
- minimum amount of assigned receivables usually CZK 5 million
- company with at least one-year history
- payment conditions – to an open account
How to do it
- based on negotiations with Factoring KB, filling in the application form for factoring including the specification of customers proposed for factoring cooperation and presentation of necessary documentation
- credit analysis and assessment of business case by Factoring KB
- conclusion of a framework agreement on assignment of receivables for consideration and start of a cooperation.