Bank Pekao SA

Definitions

Factoring

What is factoring?

Factoring is a financial service involving the conversion of deferred invoices into cash, i.e. the acquisition and financing by a factoring institution (Factor) of the Client's existing and undisputable trade receivables arising from the sale of goods and services to counterparties (Buyers). The primary purpose of the factoring is to maintain or improve financial liquidity. Thanks to the financing of invoices before their due date by the counterparties, the Client gains funds to finance current operations and settle its obligations. Factoring is also a series of additional services provided to the Customer as part of each cooperation, such as monitoring and settlement of repayments, comprehensive management of receivables, verification of buyers, as well as securing the risk of their insolvency and debt collection if necessary.

  1. Client delivers goods / provides a service to the counterparty (a receivable is created)
  2. Client sends to Pekao Faktoring the documents necessary to purchase the receivables (copies of invoices and documents confirming receipt of goods)
  3. Pekao Faktoring purchases the receivables and pays to the Client an agreed portion of the receivables, called an advance payment (e.g. 90%)
  4. Pekao Faktoring monitors the status of payments from the buyer
  5. Buyer makes repayments of receivables acquired by Pekao Faktoring
  6. Settlement of the transaction and transfer to the Client buyer’s repayment in excess of the previously paid advance payment

Who is factoring for?

Factoring is the excellent solution for companies which are:
  • looking for fast financing, without the need for a loan and the need to establish collateral
  • intending to enter new markets or start cooperation with new contractors
  • wishing to eliminate the problem of payment gridlocks and overdue receivables
  • planning to protect themselves against the risk of counterparty insolvency
  • looking for support in receivables management
  • in need to secure foreign exchange risk
  • expecting support in relations with dominant counterparties

The subject of a factoring transaction may be accounts receivable:

  • arising from the sale of goods or services
  • undisputable and not yet due
  • arising in domestic or foreign trade
  • not covered by the prohibition on assignment - and if so, then the permission for assignment is required
  • properly documented

What is factoring?

Factoring is a financial service involving the conversion of deferred invoices into cash, i.e. the acquisition and financing by a factoring institution (Factor) of the Client’s existing and undisputable trade receivables arising from the sale of goods and services to counterparties (Buyers). The primary purpose of the factoring is to maintain or improve financial liquidity. Thanks to the financing of invoices before their due date by the counterparties, the Client gains funds to finance current operations and settle its obligations. Factoring is also a series of additional services provided to the Customer as part of each cooperation, such as monitoring and settlement of repayments, comprehensive management of receivables, verification of buyers, as well as securing the risk of their insolvency and debt collection if necessary.

  1. Client delivers goods / provides a service to the counterparty (a receivable is created)
  2. Client sends to Pekao Faktoring the documents necessary to purchase the receivables (copies of invoices and documents confirming receipt of goods)
  3. Pekao Faktoring purchases the receivables and pays to the Client an agreed portion of the receivables, called an advance payment (e.g. 90%)
  4. Pekao Faktoring monitors the status of payments from the buyer
  5. Buyer makes repayments of receivables acquired by Pekao Faktoring
  6. Settlement of the transaction and transfer to the Client buyer’s repayment in excess of the previously paid advance payment

Who is factoring for?

Factoring is the excellent solution for companies which are:
  • looking for fast financing, without the need for a loan and the need to establish collateral
  • intending to enter new markets or start cooperation with new contractors
  • wishing to eliminate the problem of payment gridlocks and overdue receivables
  • planning to protect themselves against the risk of counterparty insolvency
  • looking for support in receivables management
  • in need to secure foreign exchange risk
  • expecting support in relations with dominant counterparties

The subject of a factoring transaction may be accounts receivable:

  • arising from the sale of goods or services
  • undisputable and not yet due
  • arising in domestic or foreign trade
  • not covered by the prohibition on assignment - and if so, then the permission for assignment is required
  • properly documented

Factoring is

financing

Among other things, the factoring service provides continuous access to funds as the Client makes sales with deferred payment terms. The level of financing depends on the value of deferred payment invoices transferred by the Client related to the counterparties covered by the factoring agreement. Cash obtained from the Factor immediately after sales and long before the due date of the invoices, definitely improves liquidity and allows, among other things, to settle accounts with suppliers and obtain discounts for making early payments, settle current payments to employees or subcontractors, or purchase materials necessary for the execution of subsequent orders.

Factoring is

safe business trading

Factoring increases the security of the business trade. Experience clearly shows that counterparties covered by a factoring agreement settle payments on time or with significantly less delays than others. This proves the disciplinary role of factoring. In addition, in some forms of factoring service, the Factor takes over part or all of the risk of counterparties’ insolvency. The Client then does not have to worry about non-payment of invoices issued.

Factoring is

receivables management

Among other things, the safe conduct of the business requires reliable information about contractors. As part of our factoring services, we thoroughly and quickly verify our current or potential buyers by granting trade credit limits for domestic and foreign debtors. In the case of the factoring with counterparty insolvency risk takeover, we are ready to risk our funds within the factoring limit granted by us.

Factoring is

time saving

Under a factoring agreement, the tasks of managing receivables are transferred to the Factor. It is Pekao Faktoring that collects payment from counterparties and monitors the status of settlements in case of delays or non-payment. In consultation with our Clients, we perform the necessary actions to recover receivables. Thanks to our comprehensive service, our Clients can reduce the cost of debt collection and above all, concentrate on their core business activity.
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