What is the difference of factoring from bank credits against promissory note?

Promissory notes constitute the guaranty of the credit, to be used, in the bank credits against promissory note and it is transferred to guaranty endorsement to the banks and it is continued to follow in the receivables, with promissory notes in the assets of balance sheet. Credit, used against it, is indicated within the financial debts in the liabilities. However, promissory note represents the receivable directly related to the invoice in the factoring transactions and it is transferred to the factoring institution with transferal endorsement. Amount of transferred promissory note is turned into cash by deducting from the receivables with promissory note in the balance sheet and it is not indicated within the financial debts.


How can I make my receivables from customers, who I work with open account, subject to factoring?

Receivables from firms, worked with open account, are transferred to the factor institution in advance with factoring agreement, essentially in the quality of transferal agreement. Afterwards, while invoice is issued, a note is put on it and it is informed to the debtor that receivable, arising from this invoice is transferred to the factor and amount should be paid into the account of factor.


What are the costs for factoring transactions?

There are two types of costs in the factoring transactions according to essence of the transaction. First of these is commission and expenses to be paid due to mediation for collection of receivable and/or provided collection guaranty. The other one is the interest to be paid in case it is benefited from facility of prepayment.


Can I benefit from factoring although I do not need financing?

Of course you can benefit from it. Financing function is only one off three functions of factoring with service and guaranty functions. It is possible to benefit from only collection and/or guaranty functions without benefiting from financing function.


How and upon what rate is the prepayment made in the factoring transactions?

Prepayment in factoring transactions is made upon taken over receivables by factor and in a manner not to exceed eighty percent of receivable generally.


How shall legal proceedings be made in case a receivable, subject of Factoring is not paid by its debtor?

This matter is subject to agreement between customer and factor. Legal proceedings may be performed by the customer and also it may be performed by factor institution at customer's expense.


Do I have to transfer all of my term receivables in order to benefit from the factoring transaction?

No, however it is essentially suitable to transfer the receivables collectively and in advance, there is no such an obligation.


Should the invoice have been made out certainly in order to benefit from factoring transaction?

It is stipulated in the legislation that receivables, to be subjected to factoring, are based on invoice and similar document. Those, which have to be understood from here is that the invoice is essential. However, receivables, for which issuance of invoice is not possible in respect to legal and technical aspect but which may be authenticated with a similar document, also shall be subject to factoring.


What are the services, provided by Factoring?

It has three types of service as financing, guaranty and collection. It may be benefited from three services or one of them according to agreement, made with the customer. Financing may be summarized as paying definite rate of term receivables to the customer as prepayment, guaranty may be summarized as guarantying the mentioned receivable in case buyer firm is in insolvency, collection may be summarized as management of receivables, reporting them to the customer by making collection and pursuit.


Which Receivables are not suitable for Factoring?

Generally, receivables, arising from investment goods, perishable products and sales within group, are not subject to factoring.


What are the revocable and irrevocable Factoring?

Revocable factoring is the factoring type in which factoring company does not undertake nonpayment risk of receivable and service of financing and collection are provided in this model. In case receivables are not paid, factoring company has right to return seller firm and to demand performed prepayment. In irrevocable factoring, nonpayment risk of receivable is undertaken by factoring company under limits and conditions, determined at the beginning.


Which are forms of sales contained by exportation factoring?

There are receivables, arising from exportation against goods in the foreign factoring transactions, for which guaranty service is provided.


What should the terms of receivables be?

Generally, factoring transaction may be performed for term receivables until 120 days, however, working conditions for longer terms, may be evaluated by factoring companies.


Is guaranty cancelled in case of reclamation in the goods, subject of receivable with invoice?

One of the most important reasons for cancellation of guaranty is the reclamation of goods or shipment of more different goods than demanded one by buyer. Besides, fulfillment of limit assignment conditions, compliance with international factoring rules, agreement, performed with buyer firm or compliance with order conditions are obliged to validity and continuity of guaranty.