Financial management is currently of great importance for the activities of business entities. One of them is factoring, within the framework of which the concept of a financing contract for the assignment of a monetary claim is studied, after which a corresponding agreement is concluded. Factoring refers to the type of trading and commission operations, as a result of which the customer transfers the creditor debt, in order to receive the bulk of the money, increase the speed of their turnover, reduce the costs associated with the account, and receive guarantees of debt repayment.
Why do you need factoring?
The positive side of financing against the assignment of a monetary claim is the possibility of planning future cash. Typically, this company transfers up to 90% of the requirements initially, and after collection - the remaining money, allocating commissions from them.
The main reason for applying to factoring is the emergence of the organization's need for a loan for goods.
As part of bank lending, a loan is directly considered, as well as an overdraft. In both cases, fixed periods are provided, as well as the amounts disbursed are strictly limited. And the decision on the provision of funds is made as a result of the analysis of the existing financial successes of the company. At the same time, with any form of lending, allocated funds must be repaid.
With regard to overdraft, it must be said that its repayment is carried out through the client’s own funds. In addition, such financing is of an urgent nature, the transition to cash settlement services, as well as the limit of allocated amounts.
Transactions related to opening a letter of credit, as well as making changes and performing other operations on it are realized on a paid basis, according to bank rates. Typically, these costs are paid by the buyer. In this case, it is called the applicant for the letter of credit.
In addition, payment is made after the necessary documents have been received. This means that participants should reserve a certain period for turnover and verification carried out in accordance with strict requirements and rules for letters of credit. Moreover, documents with discrepancies are usually more than 50%, and they are not accepted for payment. In some cases, they can be taken with appropriate treatment. But this will require additional time at least.
However, when applying letters of credit it is impossible to delay payment, if there are no questions with the documents. In this case, the banking organization is obliged to perform the operation.
If an open account is used, the goods are paid by transferring a payment order to the bank. Shipment is checked for compliance. Then there are no limits on the amounts, and no need to get coverage. At the same time, in this case there may be a delay in payment, but only within a certain period.
The use of an open account has negative aspects when paying with a delay. So there are risks of cash gaps, turnover deficits, as well as those associated with inflation, credit and others.
Factoring Benefits
Given this, it is sometimes more profitable to use financing against the assignment of a monetary claim - factoring.In addition to raising funds, this tool helps to avoid the risks of cash gaps (in the form of late payment) associated with a loan (if the delivery is not paid), inflation, the difference in the currency and its exchange rate, with interest and directly transactions.
The client accesses the instrument in question for various reasons. In one case, you need to check the solvency of the buyer, calculate the limit. In another, to develop an agreement on mutually beneficial conditions. In the third - to organize accounting for the sale of goods and receivables. In the fourth - to fund regularly appearing cash gaps. In the fifth - to protect against credit risks. In the sixth, to control payment for the delivery of consignments.
As a result of the introduction of financing under the assignment of a monetary claim, the company receives:
- Increase sales.
- Share growth.
- Always a wide range of products, long-term relationships with consumers.
- No need to hire additional staff.
Such services can be divided:
- For sales involving a factoring organization.
- Agency sales.
Sales may include sales, advertising, and BTL events. In direct sales, the seller himself is looking for buyers. Opposing sales take place in direct advertising. A mixed method may also be provided. In this case, conferences, exhibitions and other similar events are used. They are characterized by both inbound and outbound sales.
When financing against the assignment of a monetary claim, the parties regulate financial flows that can significantly increase their efficiency. This is expressed in increasing the rate of turnover of capital. At the same time, it becomes necessary to develop management and control mechanisms for finances.
If you need cash, the company can contact the bank to get a loan to increase working capital. But for this, as a rule, property is required, which is given on bail. If this is not possible, then you can sign a financing contract for the assignment of a monetary claim with a banking or factoring organization.
Contract
Under this agreement, one of the parties acting as a financial agent transfers or transfers money to the client on account of his monetary claim to a third party who is a debtor as a result of receipt of goods by a client, performance of work or services to a third party. The client cedes or cedes to the financial agent the corresponding monetary claim. This concept is given in Art. 824 of the Civil Code of the Russian Federation. The legal relations that arise from this agreement are described in Sec. 43 of the Civil Code.
In accordance with the factoring agreement, the client assigns the monetary claim to the buyer to the financial agent. The Bank disburses funds to the supplier before the payment period for the shipped goods and receives a corresponding fee. We agree that by suppliers we mean bank customers under the relevant agreement. They are both suppliers of goods and performers, as well as contractors.
After the cession of the requirements to the buyer, the supplier is paid from 70 to 90% of the planned revenue a couple of days after shipment, and in some cases when submitting shipping documents. After the buyer has paid the debt to the financial agent, the remaining funds are paid to the supplier, from which the corresponding fee is withheld. It is called the factoring commission.
The basis of financing under the assignment of a monetary claim is a continuing relationship of the financial nature of the supplier and the financial agent. This moment is the main distinguishing feature of the contract from cession. Moreover, in factoring there is always a concession to the requirements.
Licensing
The name "factoring" comes from the English word factor, which in translation means "Intermediary".In our country, only a banking or other credit organization can act as an intermediary. But, despite the fact that the Civil Code allows the possibility of dealing with different types of financing against the assignment of a monetary claim to commercial structures, a license is required to carry out such operations. At the same time, for factoring as a whole, the issuance of permits is not provided. In view of this, the majority of factoring companies are licensed by banking organizations.
However, there are relevant organizations that operate without a banking license. It should be understood that the conclusion of contracts with such companies may lead to disputes with debtors regarding the legality of the assignment of the claim. At the same time, the absence of a permit is not a reason to prohibit the supplier from taking into account the costs of the relevant contract for tax purposes.
Where is it better to contact?
It is more convenient for the supplier to sign a financing agreement for the assignment of a monetary claim with a banking organization where he has a r / s. This moment will allow the bank to make a decision and establish a limit on operations. In addition, the supplier can save on commissions, as individual banks charge a small fee, because factoring in them often acts as an additional service.
At the same time, it is possible to apply to specialized organizations to conclude a financing agreement for the assignment of a monetary claim. In this case, it is an advantage that the most expeditious consideration of documents is possible, as well as the receipt of additional services, since such activity is the main one for them. Customers set Software in order to monitor receivables.
Buyer Notice
After signing the contract, the company must warn buyers that the details have changed, for which it is necessary to transfer funds for delivery. This is done in writing separately for each customer.
To sign the corresponding agreement, the buyer's consent is not required. Even if the contract between the buyer and the supplier contains a clause prohibiting the assignment of debt to third parties, the subject of the financing agreement against the assignment of the monetary claim will not become invalid. At the same time, the supplier who concluded this agreement is liable to the buyer for failure to fulfill the terms of the contract. Such liability may include, for example, the obligation to pay a fine.
Organizations can enter into closed factoring agreements. Then the supplier should not notify the buyer of the financing of the debt by the financial agent. The buyer at the same time pays the money to the supplier, who himself returns them to the company with payment of remuneration. However, in case of non-payment of the buyer, the debt is already collected by the financial agent.
Contract financing
The agreement, which is concluded by the financial agent and the supplier, indicates its main conditions. As a rule, it is concluded once and the next year funding is automatically extended for the assignment of a monetary claim.
Factoring is more expensive than a bank loan. But customers know that they will receive the bulk of the amount after shipment. In addition, the costs of such an agreement sellers can pass on to the shoulders of buyers. For this purpose, it is enough to establish a certain percentage for the delay in the next payment. The relevant provision is contained in Art. 823 of the Civil Code of the Russian Federation.
The advantage of the agreement over a loan taken for a short period is that the loan is issued for a specific amount, and when factoring, the supplier can receive new amounts each time by sending shipping invoices and contracts concluded with customers to the bank organization.Therefore, in the latter case, the amounts are not determined, but depend on the turnover of the supplier.
However, it must be understood that not all suppliers are provided with financing under the assignment of a monetary claim (factoring). An important role is played by the period during which the company operates, its stable position in the market, and also prospects for the future. Before signing the contract, the financial agent also evaluates the supply volumes, the number of debtors to be transferred. For a supplier, factoring becomes all the more profitable as large amounts of financing are required.
The list of buyers whom the financial agent will finance, he approves himself. In this case, the banking organization must understand the reliability of the buyer. Each of them can be set its own amount of finance. For example, for reliable - 90%, and for unreliable - 65%. The supplier is also important information about purchasing power. A correct assessment will allow you to choose the right work policy, and also subsequently sign an agreement on the best conditions. The supplier should clearly assess the risks that the buyer will not pay in regressive financing against the assignment of the monetary claim. The concept, for example, of the low reliability of the buyer will make it possible to prepare money for settlement by the due date.
As a rule, the established limit for customers is no higher than 70-80% of the average monthly revenue. In addition, factoring companies undertake to serve only deliveries in which the deferral period is no more than 3 months (sometimes 4 months). Almost all companies providing the corresponding services have such a restriction.
In some cases, the supplier has other requirements. For example, the debt of one debtor, which is taken for servicing, should not be higher than 15% of the sum of all debts. This condition gives companies the opportunity to protect themselves from non-standard debt, including feigned ones.
If the buyer does not pay bills
After signing the contract, the supplier brings shipping documents to the banking organization on a deferred basis. If the buyer does not pay the debt, the situation may develop in one of the following two options:
- The provider returns the financing that was obtained by factoring, and pays a fee to the financial agent. If at the same time the money will be transferred in arrears, then an increased commission is provided. In this case, the risk of non-payment will be borne by the supplier.
- In case of non-recourse factoring, the financial agent carries out both financing of the supplier and debt collection. Moreover, all risks are borne by the financial agent. Suppliers choose this option when they are not sure about the customer.
Types of Commissions
Banking organizations and companies acting as a party to a financing agreement against the assignment of a monetary claim set different fees for their services. A one-time commission is fixed or in the form of a percentage of the claim, which is subject to assignment. Debt management fees can be set as a percentage of the amount of receivables or depend on the financial agent controlling the supplier’s debt.
The fee for issuing money for factoring services is set as a percentage of the transferred debt.
Sometimes financial agents set two commissions: for financing in a specified period and for delay in payment of arrears or for refunds with a delay in recourse factoring.
As a result, the amount of commissions can be from 0.5 to 5% of the amount for delivery. As a rule, it is paid when using the funds of a financial agent within 1-3 months. Therefore, when recalculating annuals, the corresponding commission becomes more impressive.For example, if it was 5% of the amount of financing, and the delay period was 2 months, this corresponds to 30.4% per annum.
Conclusion
When concluding a financing agreement against the assignment of a monetary claim (factoring), suppliers are confident in receiving the principal amount from the financial agent immediately after shipment. However, this agreement is more expensive than a bank loan. The contract is concluded even if the purchase and sale agreement provides for a clause prohibiting the assignment of debt to third parties.
Do not trust advertising about companies that provide factoring services, which states that commissions are taken into account for tax purposes. According to the Ministry of Finance, for taxation of profits, the bulk of the fees charged under the factoring agreement are subject to accounting in certain amounts, as well as interest on debts.
