Factoring

Manufacturing and trading companies frequently need to offer prolonged payment dates to their customers. On many occasions payments for delivered goods and services are made days or weeks after contractual payment dates. This usually happens when customers face temporary cash shortages and are just unable to pay for delivery on time. And the resulting gap often distorts the cash conversion cycle.

Companies make attempts to solve this problem looking for tools that will enable them to collect their receivables sooner and for solutions that will improve their cash flows in trade operations with deferred payment dates.

In order to allow them to implement aggressive sales growth strategies and make payment dates more flexible and, at the same time, to ensure them fast access to cash, Bank Handlowy w Warszawie S.A., operating under the Citi Handlowy brand, has prepared an attractive Factoring proposal.

Factoring is a financial solution where the Bank acquires short-term receivables from trade transactions, documented with invoices, prior to their payment dates, with deduction of fees, and either taking over (with recourse scheme) or not (without recourse scheme) the insolvency risk of contractor.

Factoring transactions involve three parties:

• Client (Assignor, Supplier, Seller) – i.e. the party that disposes of receivables (seller or vendor of goods/services)
• Bank – as the party that acquires receivables
• Buyer (Factoring Debtor) – i.e. the customer of the Client who is obliged under the contract to make specified payments to the Client.