Faktoring ABC – about factoring in simple terms

We hear about factoring every day, but relatively few businesses actually use this financial service. Probably, not many people are familiar with the advantages of factoring. We have asked Andrea Erdős, a head of department from Raiffeisen Bank to explain briefly to us what we need to know about factoring. When factoring is discussed, terms like purchasing receivables, assignment and undisputed claim are used. Can you explain in simple terms what factoring is? Suppliers and sub-contractors of big companies are often faced with the problem of having to wait very long periods for payment of their invoices. Though such terms of payment are unfavourable, they are forced by intense competition to accept these. The factoring service offered by Raiffeisen Bank can help to solve such problems. Our bank purchases the invoice issued by the supplier/sub-contractor and pays most of the invoiced amount to the issuer within as little as two days. The customer will then pay the amount payable to us when the invoice is due. This kind of transaction is called an assignment. In the last stage of the transaction, amounts still outstanding are settled between the supplier/sub-contractor and the bank. What is the advantage of using this service, compared to a loan? Andrea Erdős: Factoring allows businesses to offer their clients favourable payment terms. Money collected using factoring can be invested into new purchases immediately, cash flow is speeded up, which allows new deals to be concluded faster.This translates to more revenues. Our factoring service is available to companies which do not qualify for conventional loans, as factoring is based on the liquidity of the customer. Suppliers are subject to less stringent risk assessment criteria, than loan applicants. What should we know about the on-line factoring service offered by Raiffeisen Bank? Andrea Erdős: Our clients can monitor the status of their transactions or submit new transactions through the internet even outside banking hours. How can we get more information? Please, contact us for more info regarding factoring services offered by Raiffeisen Bank: e-mail: faktoring@raiffeisen.hu; telephone: 06-40-48-48-48 or visit our web site: www.raiffeisen.hu/faktoring; www.raiffeisen.hu/onlinefaktoring