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Factoring small business. Factoring services

Today, Moscow is a leader in measures to support small businesses, but factoring has so far been available only to large companies with a well-known name and large turnover, or to small businesses that work with large networks. Thanks to the guarantee of the Fund for Assistance in Lending to Small Businesses in Moscow, “kids” will be able to fully use factoring in their work. It is expected that this will help better manage accounts receivable, eliminate cash gaps when working not only with large but also with small debtors, and will also provide advantages in terms of settlements.

Factoring is one of the most common types of financing for trade operations. Perhaps most of all, this is similar to lending during cash gaps. For example, a supplier has shipped a product to a network, the network does not pay him immediately, but will wait until this product is sold in one, two or three months. And the supplier needs money immediately in order to continue working and produce the next batches.

When a factoring scheme is activated, the “factor” pays the supplier for the goods upon delivery and receives his commission. Then, after a certain period of time, the “factor” will independently receive the funds due from the trading network.

Today, “kids” can use factoring only when making deliveries to large, eminent, top-100 debtor buyers. The guarantee will allow the factoring scheme to be used for a wider range of participants,” said Alexey Fursin, head of the Moscow Department of Entrepreneurship and Innovative Development.

Currently, there are a number of support programs in Moscow that are implemented by the department and its subordinate structures. As for the Fund for Assistance in Lending to Small Businesses in Moscow, it provides guarantee support to businesses. The Fund issues guarantees to small businesses to creditors.

A typical situation is when an entrepreneur comes for debt financing and does not have enough collateral of his own, so the banks refuse. The fund works to solve this problem - it acts as a guarantor for up to 70% of the financing amount, - Alexey Fursin described the advantages of working with the fund.

According to fund specialists, entrepreneurs are most in demand for guarantees for loans to replenish working capital. They are also used by participants in the government procurement system - especially bank guarantees. In addition, the fund provides guarantees for loans for the purchase of equipment and refinancing for investment purposes.

However, according to market expert, economist and general director of the analytical agency “BusinessDrom” Pavel Samiev, entrepreneurs are not always sufficiently aware of their capabilities regarding state support.

Small businesses in Moscow have been showing positive dynamics for several years now: despite a number of negative external factors, the activity of Moscow entrepreneurs and support programs were able to “pull” them out of the crisis, he noted. - In my opinion, it is necessary to increase the awareness of small entrepreneurs: not all of them know about the opportunities and infrastructure that they can take advantage of.

The new initiative, according to the expert, will be in great demand.

Factoring allows you to solve one of the most pressing problems of small entrepreneurs: lack of working capital, especially if they are focused on large counterparty networks, explained Pavel Samiev. - Guarantee support can expand the possibilities of obtaining factoring financing and increase limits. Small businesses are already actively using similar programs for lending and leasing.

Since the launch of the guarantee state support program, small businesses in Moscow have received over 125 billion rubles in loans and guarantees.

The capital has a wide range of programs that stimulate business development: preferential loans, subsidies to compensate interest rates on loans, tax breaks and others, said Alexey Fursin. - The new support measure is being launched in pilot mode. We recommend sending your request directly to the fund. It is important for us to test this product on specific transactions. We hope that the guarantee will allow businesses to make deliveries using factoring more reliable and will expand the circle of potential participants in such a financial scheme.

Factoring for small businesses is a universal tool that allows you to constantly develop, regardless of the relationship established between the company and buyers and clients. The main feature of this type of transaction is the ability to operate without a lack of working capital. Factoring for small businesses makes it possible to receive up to 90% of the delivery cost immediately after shipment of the goods.

What is the essence of factoring for small businesses?

This is an opportunity to receive a large part of the payment from the buyer for the delivery of goods to him. It is not the client himself who pays the supplier, but the intermediary (factor). This is an investment company to which the right to receive finance from the supplier is assigned.

Factoring for small and medium-sized businesses works according to the following scheme:

the goods are sent to a client who needs a deferred payment;
other related documents are filled out;
the supplier transfers the papers to the factor;
the intermediary transfers 70-90% of the buyer’s debt amount;
when the client deposits money into the factor's account, the latter transfers the remaining amount to the client.

With this type of transaction, the period of cash receipts from the buyer varies from 90 to 180 days. One or more buyers are specified in one contract, and each has its own boundaries. The standard contract is concluded for 12 months with the possibility of extending the term or indefinitely.

There are several types of such transactions. Closed factoring for small businesses is different in that the buyer does not know about the presence of a third party in the transaction. If open, the client is notified in writing.

The main advantages include:

Continuity of cash flow regardless of the regularity of payments by counterparties. This increases cash flow and makes the business stable.
Dealing with accounts receivable becomes simpler, so attention is paid to other aspects of the business when necessary.
Providing a deferment is an additional benefit for buyers. During this time, the seller can always find new customers, analyze prices and optimize them.
The seller receives additional guarantees for making payments and information about the debtor’s solvency.

This type of transaction also has its disadvantages. In our country, factoring is still in its infancy, so confusing rates are offered. In the case of non-recession factoring, the company receives no more than 90% of the delivery cost. The rest becomes available only after payment is made by the end buyer. It is also obligatory to pay a remuneration to the factor, which is a certain percentage of the transaction.

After analyzing the pros and cons, you can understand that factoring is beneficial only in certain situations:

When a factor offers services at an acceptable cost, which should be transparent.
Businesses should perform better with factoring than with delays.
The supplier must have a large number of buyers to justify all the manipulations.

To achieve the latter task, purchasing factoring for small businesses is often used. This is a deal designed for large buyers, ensuring the construction of a particularly efficient procurement system.

Evgeny Smirnov

# Factoring

Factoring market in Russia

Recent studies show that the size of the factoring services market in Russia exceeds 2 trillion. rubles, which indicates the popularity of this service.

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Features of factoring in small businesses
Types of factoring
Purchasing factoring
Advantages and disadvantages
Factoring scheme for small businesses
Small Business Financing Options

Lack of free capital is often the reason for the death of a business even at the inception of an idea. There are also frequent cases when an entrepreneur manages to find funds to launch a startup, but non-payments by counterparties have a negative impact on the efficiency of the trading mechanism.

Due to its many advantages, factoring is considered by representatives of small and medium-sized businesses as an effective lever for increasing capital turnover.

Factoring is the sale of agency functions for managing accounts receivable to a third party. In the context of globalization, small businesses can no longer exist on their own funds, which are often limited, forcing them to seek outside financing.

Features of factoring in small businesses

For small businesses, factoring is the most effective method of financing. For example, your company is engaged in the wholesale sale of certain goods. Immediately after its production, the goods are shipped to retail chains. In the modern economic market, such contracts are concluded with deferred payment. In other words, you will receive your funds only after the retail store sells the product and has the money to pay the supplier.

Of course, from a financial point of view, it is extremely unprofitable to wait until each counterparty will be able to sell the goods and pay the seller so that he can purchase (or produce) the next batch. This has a detrimental effect on capital turnover, which will affect the bottom line.

Factoring is an excellent opportunity to receive up to 90% of revenue immediately after the products are shipped, which is why this method of financing is so popular in small businesses.

Types of factoring

Depending on the degree of presence of the parties, several types of factoring are distinguished:

International and domestic.
With or without regression. In the first case, the factor may require the supplier to repay the buyer's debt.
Open or closed. With closed factoring for small businesses, there is no notification of the conclusion of the contract. The buyer makes all payments to the supplier, who sends them to the factor.

Purchasing factoring

Purchasing factoring is a type of factoring operation in which it is not the supplier, but the buyer himself, who contacts a specialized company or banking institution. In most cases, the factor's client is a large buyer, and financing can be carried out with or without recourse.

Compared to other financial instruments, purchasing factoring is a faster and more efficient way to attract working capital for wholesale purchases. This allows you not only to increase the size of purchased goods, but also to speed up the turnover of supplies.

Features of the purchasing factoring agreement

When agreeing on the terms of a purchasing factoring agreement, the following points must be taken into account:

If the goods are shipped under a consignment agreement, the factoring company will most likely refuse financing. To cooperate, it is necessary to conclude a contract with the counterparty, according to which the right to the product will be transferred to the buyer.
The deferment under the contract cannot be more than 120 days.
The factor's commission will be paid by the buyer, but it is also possible to share the remuneration with the supplier. In this case, this point should be indicated in the purchase and sale agreement and the contract with the factoring company.
It is the buyer who must collect and process all documents transferred by the factoring company.
Purchasing factoring can be carried out with or without recourse. In the first case, if the buyer is unable to pay within the agreed time frame, the factor may require the supplier to repay the debt to him.

If you choose the option of purchasing factoring without recourse, then the commissions will be higher, since in this case it is the factor that takes on the financial risks.

Advantages and disadvantages

Factoring for small businesses is popular and in demand in the financial market due to a number of advantages:

the ability to quickly raise funds for the services or goods provided;
prompt increase in working capital for small businesses that cannot boast of a large amount of available funds;
accelerating sales volumes and creating the opportunity to enter new markets;
is provided without collateral, which makes factoring stand out compared to conventional loans.

Despite many advantages, factoring continues to be an expensive pleasure, especially when it comes to non-recourse financing.

Benefits of small business factoring for buyer and supplier:

For the buyer	For the seller
The opportunity to obtain or increase a commercial loan from suppliers - the factor transfers money to counterparties immediately after the goods are shipped to the warehouse.	Increase in sales volumes. Cooperation with a factoring company allows you to increase the size of a commercial loan for buyers.
Optimization of working capital. There is no need to withdraw money from circulation in order to make an advance payment or pay in full for the delivery.	Access to an effective financing instrument - the supplier receives the full amount for the goods on the day of shipment.

Factoring scheme for small businesses

Factoring for small businesses is carried out in the following stages:

The goods or services are shipped on deferred payment terms;
The supplier enters into a service agreement with a factoring company and notifies the counterparty about this;
The supplier of products or services provides the factor with a package of primary documents to confirm the shipment of products or provision of services;
The factor transfers to the seller’s account an agreed percentage of the original cost of the product;
The buyer transfers funds to the factor's account to pay for goods or services;
After the buyer has fully repaid the debt, the factor transfers the remaining balance to the supplier minus his commission.

The amount of the initial amount that is paid to the supplier depends on many aspects: the size of the transaction, deferment and factor risks. The size of the advance payment usually ranges from 50–90% of the total amount.

It should be noted that this scheme of operations is typical only for open factoring, when the buyer is aware that there is a third party in the transaction. However, it is also possible that the buyer does not know about the presence of a third partner (closed factoring). In this case, the debtor transfers funds to the account of the seller, who then sends the received money to the factor.

On November 26, 2018, JSC Globexbank became part of PJSC JSCB Svyaz-Bank. The decision to merge was made by the Supervisory Board of the main shareholder of both banks, the Vnesheconombank group, to create an updated, reliable single financial institution

The combined product line includes the best offers of the two banks for both private and corporate clients.

The main shareholder of Svyaz-Bank remains the state corporation Vnesheconombank, which is a guarantor of its reliability.

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Why did we unite?

JSC Globexbank and PJSC AKB Svyaz-Bank are subsidiaries of the Vnesheconombank Group. The decision to join was made by the supervisory board of the banks' main shareholder. The unified model of the two banks will optimize costs and increase operational efficiency, and the combination of best practices will ensure growth in all areas of business.

What's new with us?

Brand

JSC Globexbank becomes part of PJSC JSCB Svyaz-Bank - the banks are united under the Svyaz-Bank brand.

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The combined unified product line includes the best offers on products and services of the two banks.

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Regional branches of Globexbank - Central, Nevsky, Siberian, Donskoy and Povolzhsky - entered the Svyaz-Bank network and continued to work at the same addresses. Now the Bank serves clients in 64 cities of Russia.

New offices of Svyaz-Bank

In offices opened on the basis of branches that were part of the Globexbank branch network, the existing agreements of Globexbank JSC will be fully serviced. In addition, they offer operations on Svyaz-Bank products that do not require working with a cash register - accepting packages of documents and submitting loan applications, issuing and issuing plastic cards, connecting remote banking services.

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To work under agreements concluded with JSC Globexbank, please contact the Svyaz-Bank branch, opened on the basis of the former full-scale branch of JSC Globexbank. Svyaz-Bank managers will suggest the location of a suitable office nearby.

In the offices included in the Svyaz-Bank network before the merger, the full range of bank services will, as before, be available, as well as the conclusion of new agreements and transactions under agreements opened in Svyaz-Bank.

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For Globexbank clients, product conditions correspond to existing (previously concluded) agreements.

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Clients, as before, can use Globexbank’s mobile and online banking without restrictions.

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02/08/2018 Roman Avdeev

Factoring is a fairly young tool in the Russian financial services market, but it has already seriously established itself as an affordable and convenient alternative to credit for the supply of goods.

But is factoring suitable for small and medium-sized businesses?

The essence of the service

Let's briefly get acquainted with the factoring mechanism. Its essence lies in the fact that the debtor can make deferred payments to the creditor for the supply of goods through a company providing factoring services.

When the creditor documents that he has delivered the goods to the debtor, the factor company pays the creditor 80-90% of the debtor's debt (in rare cases, 100%).

Then the debtor no longer owes anything to the creditor; he pays the debt to the factor company. When he pays it off in full, this company returns the remaining 10-20% of the money to the lender minus a commission, which usually does not exceed 3%.

This approach is beneficial for all parties, because it helps to minimize risks and manage funds more competently.

Use by small and medium businesses

Factoring is beneficial for legal entities belonging to the field of small and medium-sized businesses, as well as for individual entrepreneurs, because it significantly reduces their risks. For individuals, traditional lending is better suited.

Typically, the buyer's payment period is set at no more than 180 days, and a certain limit is set for each buyer based on the financial situation of the creditor, as well as the history of the relationship between the debtor and the creditor.

Conveniently, as the company grows, the agreement is also gradually revised, the limits increase, the turnover increases - there are not all the difficulties and strict restrictions that more traditional loans have.

For factoring, it is not even necessary to renew contracts with buyers, only to notify them of a change in the details with which they will now have to work. It is also convenient that the factor can take over the maintenance of documentation on accounts receivable, as well as monitor the receipt of payment for supplies, which is usually uncomfortable for small and medium-sized businesses to do.

Working with the debtor

Some banks provide a reverse service - when factoring is offered not for the creditor, but for the debtor. This is very beneficial for those who work in the retail industry, who have many suppliers, for example, for online stores.

Who provides factoring services?

Metallinvestbank

Metallinvestbank is one of the leaders among factoring firms in Russia, occupying fourth place in the ranking of factors in terms of the number of companies served at the end of 2012.

Alfa Bank

Factoring at Alfa-Bank will allow the client:

receive financing up to 90% of the amount of supplies against documents confirming the fact of shipment;
obtain financing without collateral;
ensure long-term replenishment of working capital;
increase financing as sales volume grows;
conveniently plan cash flows;
effectively control and manage accounts receivable (payment is controlled not only by you, but also by the bank’s personal manager).

The exact list of documents for factoring services is compiled by a personal manager.

Sberbank

Operated by a subsidiary Sberbank Factoring.

The company offers these financing conditions:

up to 100% of the amount of supplies according to documents confirming the fact of shipment
lack of collateral
execution of an open-ended factoring agreement with the possibility of renewing financing
according to the Client's decision
organization of work through electronic document management (E-factoring)

VTB 24

Similar to Sberbank, the subsidiary company VTB Factoring provides factoring services.

The company has been providing factoring services since 2009. The geography of the company's activities covers 17 of the largest cities in Russia; clients are also attracted for factoring services through branches of VTB Bank.

VTB Factoring is a member of the largest international factoring association IFGroup and the Association of Factoring Companies. In 2013, VTB Factoring had a share of about 30% in the Russian factoring market. Turnover: 2 trillion rubles.