2 factoring as a way of financing the activities of an organization. Factoring as a form of financing

A new credit product that has become widespread in foreign practice is factoring. It arose on the basis of commodity credit and was formed as an independent credit product in the middle of the 20th century. In the very general view factoring can be defined as the activity of an intermediary bank or a specialized institution (factoring company) to collect Money from the debtors of its client (industrial or trading company) and managing its debt claims. The activities of factor intermediaries are designed to solve problems of risks and payment terms in relations between suppliers and buyers and give these relations greater stability.

Factoring(from Latin factor - “agent, intermediary”) - a type of trade and commission operation combined with lending working capital client, which is associated with the assignment by the client-supplier to the factoring company (factor firm) of unpaid payment claims for products supplied, work performed, services rendered and, accordingly, the right to receive payment for them. Factoring includes collection accounts receivable client, lending and guarantee against credit and currency risks.

Factoring is a combination of supplier credit with commission services consisting of accepting credit risks factor company. In this case, the factor firm assumes the obligation to receive unpaid debts. The factor firm is usually associated with the bank (it is its subsidiary).

IN Russian conditions Factoring operations are carried out by specialized departments of banks.

The factoring operation scheme consists of two parts (Fig. 1.1):

1) payment by the factor company of 80–90% of the contract amount;

2) payment of the balance of the contract minus commission services (including a risk premium) after settlements with buyers.

Fig.1. Factoring scheme

Factoring is a young but developing branch of the global financial industry. It originated in the 60s, but by now the global turnover of factoring operations has reached $395 billion. Its main goal is to maintain the liquidity of supplier enterprises; scope of application – short-term contracts for small amounts for the purchase of equipment, concluded in the field of medium and small businesses.4

The essence of factoring is the provision by the bank of monetary resources and services to trading, manufacturing and service companies (hereinafter referred to as suppliers): covering a number of risks that occur in the trading operations of companies, managing receivables, consulting, information and analytical services.

Let's take a closer look at the financing mechanism for factoring. After delivering the goods to the debtor, the supplier provides the bank with an invoice and immediately receives a significant part in the form of an advance, up to 90% of the delivery amount, without waiting for payment from its buyer. The remaining funds for deliveries (minus the bank commission) are credited to the supplier's current account as they are actually paid by the buyers to the bank's factoring account. Those. in this case, the bank acts as a person advancing the trade credit provided by the supplier to the buyer with the subsequent return to him of the balance of the delivery amount.

The supplier gets the opportunity to plan its financial flows regardless of the payment discipline of buyers, being confident in the unconditional receipt of funds from the bank against accepted shipping documents for deliveries with deferred payment. Often trade turnover supplier is limited only due to the fact that the buyer is not able to pay for a larger volume of purchases without having sufficient funds for this working capital, and the supplier, accordingly, does not have the working capital necessary to provide or increase trade credit to the buyer. This form of factoring allows the supplier to offer its customers a trade credit, limited only by the buyer’s sales capabilities.

The difference between factoring financing and others banking products. Sometimes they try to compare factoring with a loan, although factoring and bank loans have different natures and are aimed at meeting different needs of suppliers.

The loan is characterized by urgency, which implies its repayment in certain period. Thus, a bank loan is absolutely unacceptable for financing supplies with deferred payment. If a six-month loan is used to finance shipments of goods with deferred payment, then how will the company’s operating conditions change in the situation of repaying the trade loan, and what will happen if the supplier fails to receive new loan after its repayment. Today in Russia, most loans are issued for a period of up to a year, which leads to situations like this. Factoring today is the only perpetual liability in Russian economy and allows you to plan a development program for many years to come.

Another feature of the loan is the need to provide collateral to obtain it. The fundamental difference factoring and credit is that the loan is focused on the company’s past successes, on those assets that were earned yesterday, while factoring is focused on future sales successes, and even if sales grow 5 times, this will not be a limitation for financing in within the framework of factoring. More detailed comparison financing when factoring with others credit products presented in table 1.

Table 1. Differences between factoring financing and other credit products

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Factoring is a financial service system, commission and intermediary services provided by the client's factoring company related to working capital lending.

The purpose of factoring is to accelerate the turnover of working capital and strengthen payment discipline in the economy.

There are 3 parties involved in factoring operations:

1. Intermediary factor (bank or specialized factoring company);

2. Supplier;

3. Buyer.

Historically, convention factoring was the first to arise, which is universal system financial services for clients, including accounting, settlements with suppliers and customers, insurance lending. The client retains only the production function.

Enterprises with this form of factoring may refuse to retain their own staff of employees performing functions assumed by the factoring organizer. This helps reduce production costs, but there is a risk of complete dependence of the client on the factoring company.

Along with conventional (broad) factoring, there is confidential factoring, which is limited to performing only certain operations - assignment of the right to receive money, payment of debts, etc.

Confidential factoring is a form of providing the supplier - factoring client with a loan for goods shipped, and the buyer with a payment loan.

Currently, the intermediary factor provides the following services to clients:

1. Acquire from supplier enterprises the right to receive payment for commodity transactions from one or a group of buyers in agreement with the seller.

The essence of this operation: the bank pays the supplier the cost products sold immediately and then receives money from buyers, i.e. provides insurance lending.

2. Purchasing from companies that supply accounts receivable for goods shipped and not paid for on time by customers.

Conditions: delay in payment for no more than 3 months and upon notification from the payer’s bank that the payer has not been declared insolvent.

3. Purchase bills from your clients with immediate payment (early repayment).

Commission remuneration:

Discount = Amount of bill – Amount of payment on the bill.

The main purpose of factoring services is to finance the client’s working capital (80% - 90%).

For its services, the intermediary factor charges a certain fee, which includes:

Commission remuneration;

Interest on a factoring loan, which is charged from the date the loan is granted until the date of receipt of funds for shipped products from the buyer.

Credit risks.

Credit risk– the risk of the debtor’s failure to fulfill its obligations to the supplier of goods and services, i.e. risk of debtor default.

Credit risk is the risk of losses associated with the deterioration of the condition of the debtor, counterparty to the transaction, or issuer of securities.

The deterioration of the condition (rating) is understood as both a deterioration in the financial condition of the debtor and a deterioration in business reputation, position among competitors in the region, in the industry, a decrease in the ability to successfully complete a specific project, etc., i.e. all factors that can affect the debtor's solvency.

Losses in each specific case can be:

Direct – non-repayment of the loan, non-delivery of funds;

Indirect – a decrease in the value of the issuer’s securities, the need to increase the volume of loan reserves.

Credit risk assessment procedures are based on the following concepts:

1. Probability of default – the probability with which the debtor may find himself in a state of insolvency over a certain period of time.

3. Amount exposed to credit risk - the total volume of obligations of the debtor, counterparty to the organization, the amount of investments in securities issuer, etc.

4. Loss in case of default - the proportion of the amount exposed to credit risk that could be lost in the event of default.

Grade credit risk can be done from 2 positions: assessment of the credit risk of an individual operation and a portfolio of operations.

A basic assessment of the credit risk of an individual transaction can be carried out at different levels of detail:

Estimation of the amount at risk;

Assessment of the probability of default;

Assessment of expected and unexpected losses.

At classical approach to credit risk management, coverage of expected losses is carried out at the expense of the formed reserves, and coverage of unexpected losses on credit risks should be made at the expense of own funds(organization capital).

Credit risk management methods:

1. Formation of reserves (RK);

2. Credit risk in trade operations on deferred payment terms can be eliminated using factoring (see question No. 6).

3. Credit risk insurance in an insurance company.

The object of insurance is the property interests of the insured, associated with the possibility of losses as a result of failure to fulfill contractual obligations by the counterparty (debtor of the insured).

An insured event for trade credit insurance is the occurrence of losses for the policyholder as a result of the insolvency (bankruptcy) of the debtor; failure to fulfill obligations due to force majeure; long delay in payment on the part of the counterparty (debtor).

Questions for self-control:

1. Credit functions, their characteristics. Forms and types of credit?

2. Bank loan, its characteristics. Principles bank lending?

3. Commercial loan, its features?

4. Leasing as a tool long-term financing?

5. What are the main methods of lending to legal entities?

6. What is the essence of open line of credit: renewable, non-renewable?

7. What documents are submitted to the bank when receiving a loan? legal entity?

8. What basic conditions should be provided for in loan agreement?

9. The main forms of ensuring loan repayment? What are the basic requirements for collateral of property?

10. Tell us what rights the mortgagor has to own, use and dispose of property without transferring it to the mortgagee.

11. How should a loan be repaid by a legal entity (frequency, order)?

Factoring, like many other financial instruments, came to Russia from the West. This English word factoring comes from factor - commission agent, agent, intermediary, and means the purchase of receivables from the Supplier of goods (services) with the assumption of responsibilities for their collection and the risk of non-payment. The supplier sells accounts receivable, that is, the amounts that buyers owe to the company, a specialized financial institution-factoring company, which in turn is called a Factor. The difference between the Factor and other agents, for example from the assignee, is that he takes possession of the debt, that is, the Supplier loses ownership rights to the receivables.

The economic side of factoring is manifested in the fact that it allows you to increase the liquidity of an enterprise’s assets, as well as capital turnover and thereby the profitability of entrepreneurs. According to Western experts, this is most relevant for small and medium-sized enterprises. The use of factoring in many cases allows enterprises to reduce the costs of maintaining special financial services, increasing the efficiency of financial services by transferring these functions to specialized companies, where such activities are usually more efficient due to high degree rationalization.

If we evaluate factoring from the point of view of the opportunities it opens, then in the present conditions factoring in a broad sense is considered to be an important tool of modern management, especially in relation to financing and management of an enterprise, as well as risk management.

In countries with developed market economy and financial infrastructure factoring companies or those engaged in this activity commercial banks offer their clients a fairly diverse range of financial services, conditional on the latter transferring their monetary claims.

Today, factoring is predominantly defined as legal relation between a financial agent (factor) and an enterprise selling goods or services (“client”), according to which the factor buys the client’s receivables (with or without the right of recourse to the client) and in connection with this debt controls the loans provided, and also carries out accounting trading operations client. Thus, factoring has the following main functions:

1) maintaining relevant accounting operations;

2) control over what is provided commercial loan, including receiving payments;

3) protection against credit risks (in the case of “without turnover” factoring);

4) financing the client’s current activities.

1.Types of factoring

Factoring is a type of trade and commission operation, which includes collection of accounts receivable, lending of working capital, guarantees of credit and currency risks, as well as information, insurance, accounting, consulting and legal support for the Supplier.

Depending on the availability of the Supplier’s financing function, factoring services are divided into:

· Factoring with payment (with service factoring), which involves collecting debt, assuming the risk of non-payment and transferring funds as they are paid by the Buyer. In Russian practice this is called administrative management accounts receivable. In this case Commission remuneration The factor is about 0.5-1% of the amount of assigned receivables. The amount of the commission varies from the total amount of the Supplier's debt, decreasing with its growth;

· Factoring with payment and financing (with service plus finance factoring) includes payment to the Supplier immediately after delivery of goods up to 90% of their selling price, in the presence of invoices accepted by the Buyer. The balance is paid after the debt is paid off. In this case, the Factor establishes a risk remuneration for advances (0.5-1.2% of the debt amount) depending on the total number of debtors transferred for factoring services. As the number of debtors increases, the Factor's risks are eroded and the commission decreases. The Supplier also pays the Factor a fee for the use of monetary resources, which is several points higher than the loan rate. The amount of this fee depends on the turnover period of the Supplier's receivables. In Russia, Factor usually requires the provision of original documents for the delivery made (invoice and waybill), charging a small commission (about 50-70 rubles per s/f) for the registration of these documents. In Western practice, such a component of the commission also exists, but often the Supplier sends an electronic file to the factoring company containing a sales book for a certain period; the original delivery documents are provided later.

Internal factoring transactions typically involve three parties: the Supplier, the Buyer and the Factor. In this case, the factoring scheme looks quite simple:

2. Assignment of the right to claim the delivery debt to the Bank.

3. Early payment (up to 8 0% from the amount of goods delivered) immediately after delivery.

4. Payment for the delivered goods.

5. Payment of the balance of funds (from 10% , after payment by the buyer) minus commission.

2.Analysis of the buyer’s solvency

When purchasing invoices, the factoring company analyzes the Buyer’s solvency and integrity, since the Factor’s risks associated with non-payment of invoices relate specifically to the Buyer, and not to the Supplier. Of course, the Factor also checks the Supplier, since there is a risk of them providing false delivery documents, which may entail financial losses for the Factor. To avoid the appearance of " bad debts» the Factor may refuse to purchase some accounts or debts of individual Buyers, or offer an agreement to purchase receivables with the right of recourse, that is, a reverse claim against the Supplier. This agreement stipulates the deadline for recourse, what debts it applies to, when and how it is executed. In Russia, recourse usually occurs 30 days after the expiration of the deferred payment, but the Supplier has the opportunity, with the consent of the Factor, to extend the deferred payment if the Buyer has objective difficulties. The presence of recourse does not reduce the Factor’s risks to zero, but only reduces them. When factoring with recourse, the Factor does not take on credit risk, that is, the risk of non-payment by the Buyer at all, but takes on liquid risk - the risk of non-payment on time, which happens much more often. Russian buyers do not have strict payment discipline. Payment by the Buyer 3-5 days after the expiration of the deferment period is common practice.

It is worth noting that the fact that the Factor has the right of recourse against the Supplier slightly reduces the cost of factoring services for it (by approximately 15-20%), therefore it makes sense for the Supplier to assign with the right of recourse the receivables of reliable Buyers who have a good and long-standing credit history, thereby reducing your costs for factoring services.

Introduction 3

1.Types of factoring 5

2.Analysis of the buyer’s solvency 6

3.Closed and open factoring 7

4. Advantages of factoring 10

5.About accounts receivable 13

6.Credit or Factoring 19

Conclusion 22

References 24

Introduction

Factoring, like many other financial instruments, came to Russia from the West. This English word factoring comes from factor - commission agent, agent, intermediary, and means the purchase of receivables from the Supplier of goods (services) with the assumption of responsibilities for their collection and the risk of non-payment. The supplier sells accounts receivable, that is, the amounts that buyers owe to the company, a specialized financial institution-factoring company, which in turn is called a Factor. The difference between the Factor and other agents, for example from the assignee, is that he takes possession of the debt, that is, the Supplier loses ownership rights to the receivables.

The economic side of factoring is manifested in the fact that it allows you to increase the liquidity of an enterprise’s assets, as well as capital turnover and thereby the profitability of entrepreneurs. According to Western experts, this is most relevant for small and medium-sized enterprises. The use of factoring in many cases allows enterprises to reduce the cost of maintaining special financial services, increasing the efficiency of financial services by transferring these functions to specialized companies, where such activities are usually more efficient due to a high degree of rationalization.

If we evaluate factoring from the point of view of the opportunities it opens, then in the present conditions factoring in a broad sense is considered to be an important tool of modern management, especially in relation to financing and management of an enterprise, as well as risk management.

In countries with a developed market economy and financial infrastructure, factoring companies or commercial banks engaged in this activity offer their clients a fairly diverse range of financial services, conditional on the latter transferring their monetary claims.

Today, factoring is primarily defined as a legal relationship between a financial agent (factor) and an enterprise selling goods or services (the “client”), according to which the factor buys the client’s receivables (with or without the right of recourse to the client) and in connection with this debt, controls the loans provided, and also carries out accounting of the client’s trading operations. Thus, factoring has the following main functions:

1) maintaining relevant accounting operations;

2) control over the provided commercial loan, including receipt of payments;

3) protection against credit risks (in the case of “without turnover” factoring);

4) financing the client’s current activities.

1. Types of factoring

Factoring is a type of trade and commission operation, which includes collection of accounts receivable, lending of working capital, guarantees of credit and currency risks, as well as information, insurance, accounting, consulting and legal support for the Supplier.

Depending on the availability of the Supplier’s financing function, factoring services are divided into:

Factoring with payment (with service factoring), which involves collecting debt, assuming the risk of non-payment and transferring funds as they are paid by the Buyer. In Russian practice, this is called administrative management of receivables. In this case, the Factor's commission is about 0.5-1% of the amount of assigned receivables.

The amount of the commission varies from the total amount of the Supplier's debt, decreasing with its growth;

Internal factoring transactions typically involve three parties: the Supplier, the Buyer and the Factor. In this case, the factoring scheme looks quite simple:

2.Analysis of the buyer’s solvency

When purchasing invoices, the factoring company analyzes the Buyer’s solvency and integrity, since the Factor’s risks associated with non-payment of invoices relate specifically to the Buyer, and not to the Supplier. Of course, the Factor also checks the Supplier, since there is a risk of them providing false delivery documents, which may entail financial losses for the Factor. In order to avoid the appearance of “bad debts” from the purchase of some accounts or debts of individual Buyers, the Factor may refuse or offer an agreement to purchase receivables with the right of recourse, that is, a reverse claim against the Supplier. This agreement stipulates the deadline for recourse, what debts it applies to, when and how it is executed. In Russia, recourse usually occurs 30 days after the expiration of the deferred payment, but the Supplier has the opportunity, with the consent of the Factor, to extend the deferred payment if the Buyer has objective difficulties. The presence of recourse does not reduce the Factor’s risks to zero, but only reduces them. When factoring with recourse, the Factor does not take on credit risk, that is, the risk of non-payment by the Buyer at all, but takes on liquid risk - the risk of non-payment on time, which happens much more often. Russian buyers do not have strict payment discipline. Payment by the Buyer 3-5 days after the expiration of the deferment period is common practice.

It is worth noting that the fact that the Factor has the right of recourse against the Supplier somewhat reduces the cost of factoring services for it (by approximately 15-20%), therefore, it makes sense for the Supplier to assign with recourse the receivables of reliable Buyers who have a good and long-standing credit history, reducing thereby your costs for factoring services.

3.Closed and open factoring

Factoring can be either open (disclosed factoring) or closed (undisclosed factoring). With open factoring, the debtor is notified that a factor is participating in the transaction and makes payments to his account, thereby fulfilling his obligations to the Supplier. In the case of closed factoring, the seller does not want to disclose the reasons that forced him to use the services of the Factor. The Debtor is not notified of the existence of a factoring service agreement and continues to transfer funds to the Supplier, who in turn endorses them in favor of the Factor. Currently, the possibility of using closed factoring in Russian conditions is limited, as it leads to a sharp increase in the Factor’s risks. Chapter 43 Civil Code RF Art. 830 clause 1 states: “The debtor is obliged to make a payment to the financial agent, provided that he has received from the client or from the financial agent a written notification of the assignment of a monetary claim to this financial agent and the notification defines the monetary claim to be executed, and also indicates the financial agent to whom payment must be made." Typically, the procedure for notifying the debtor about the assignment of debt to the Factor is undertaken by the Supplier, because the Buyer will perceive this psychologically and technologically easier than receiving this notification from the Factor. Some Suppliers, before deciding to switch to factoring services, worry that the Factor's work may affect their client base. In fact, the conflict between the client and the debtor is primarily disadvantageous for the Factor, because its remuneration depends on the Supplier's turnover. For the Buyer, only the payment order details are changed. IN modern Russia factoring is not yet as widespread as in the West, so some Suppliers encounter misunderstanding on the part of Buyers when signing notifications, because the bank appears to them as “people in an armored car and with machine guns.” Confirmation that the factoring scheme is convenient not only for the Supplier, but also for the Buyer is that Russian operators of the factoring market successfully interact with such well-known trading organizations as the Ramstore shopping center, Felma LLC (the Kopeika supermarket chain), GUM , TSUM, other large department stores and supermarkets. If we talk about the advantages of factoring for the Buyer, they are not so obvious, but here are some of them:

Obtaining a trade loan (deferred payment), if it was not previously provided by the Supplier due to a lack of working capital or an unacceptable level of risk for it. If there is a deferred payment, the possibility of increasing its term;

Obtaining more preferential prices (discounts, etc.) by improving the solvency of the Supplier itself in its settlements with counterparties.

Expanding the range of goods (services) sold, which entails attracting new customers and, as a result, increasing sales and business profitability.

4. Advantages of factoring

Factoring is irreplaceable financial instrument for new and small companies, as well as for companies that have chosen bank lending limits, because factoring is an unsecured form of financing that does not require a credit history. This does not mean that factoring is not needed. large companies. For example, Parmalat, with the help of factoring, has become a well-known manufacturer and continues to actively use it to this day. Also, large industrial holdings in the West (General Electric, Fiat) establish their own factoring companies that engage in intra-company factoring, that is, financing the supply of components on trade credit terms. Among Russian companies that have introduced factoring into their business, we can note such well-known manufacturing companies as the Red October confectionery factory, Salmon International CJSC (frozen foods). You can also name a number of large wholesalers and distributors. These are TK Mistral CJSC (Heinz, Green Giant), Vigo Lux CJSC (DIM underwear), Rusmed M LLC (household chemicals), Stupeni-opt LLC (dairy products) , CJSC "Pharmacy Holding" (medicines). Most of the above companies are suppliers of food or consumer goods. This is due to the fact that such goods are the most liquid and their turnover is not so high. So, let's look at the benefits of factoring for the Supplier.