NON-RECOURSE FACTORING – financing of receivables with insurance option
Four reason to choose Coface non-recourse factoring
- advance payment on account of the financed receivables
- a takeover of debtors' insolvency risk (of up to 100 per cent)
- lower costs due to combining factoring with other Coface services
- financing not increasing short-term liabilities
Coface non-recourse factoring is more than just financing short-term receivables, but also a up to 100 per cent protection within the credit limit.
This product is perfect for all those who wish to collect their payments quickly and get protection against their clients insolvency. Non-recourse factoring with a 100 per cent of default risk take over does not increase short-term liabilities (off- balance-sheet financing).
TWO TYPES OF FACTORING CONTRACTS:
STANDARD – by signing one contract you get both financing and insurance
COMPLETE – financing and insurance may be negotiated separately to suit your special needs
NON-RECOURSE FACTORING ALLOWS YOU TO:
- risk assessment and monitoring done by a single provider which means faster service saving your time and money
- improve safety of the business by getting fast and reliable financial condition assessment of your potential clients – both domestic and foreign ones
- get an access to the Poland's biggest Coface company info database
- up-keep good financial indicator – conversion of receivables to cash in the balance sheet
Non-recourse factoring instead of working-capital credit – a case study
A dairy product producer has been selling their products to 20 wholesalers located all over the country for a few years now. The clients require trade credit of average payment term of 45 days, whereas the producer has to pay their payables to milk suppliers within 7 days of the purchase date. This discrepancy makes the producer look for an extra source of receivables financing. The company is not willing to take a working-capital bank credit, as they are planning a major production facility investment to be financed with the use of a bank loan, and a working capital credit would burden their short-term liability side, and elevate the cost of the investment loan.
Instead of taking a working-capital credit, the company decides to sign a non-recourse factoring contract (with a default risk takeover) with Coface. Now the company assigns their selected receivables to Coface, and straight away receives an advance payment of up to 90 per cent of the invoice total amount. The remaining amount is paid out on the client payment day.
To sum up
Instead of waiting 45 days for payment from their clients, the company gets cash within 48 hours of notifying Coface on the issuance. Moreover, the factor has assumed the whole risk of long-term payment default or even insolvency of all wholesalers specified in the contract.
Coface factoring turns out to be an excellent device to improve the company's liquidity and to monitor the incoming payments in the ever changing business environment which requires constant update of information related to debtor credibility.