In order to efficiently use resources and reduce dependence on the Central Bank, the country's largest financial institution in 2014 introduced a new subsidiary to the market. Sberbank Factoring LLC is a member of the Association of factoring companies. Only in the first year of work, the organization managed to create a professional team and bring competitive products to the market.
Definition
Factoring is the financing of activities against the assignment of a claim. In the relationship between the supplier and the buyer, there is often a need for deferred payment. The buyer’s business profitability increases, while the supplier’s receivables increase. In order not to wait for a refund period from the buyer, you can conclude a factoring agreement with the bank.
Scheme
The essence of this transaction is as follows:
- The creditor transfers to the factor all documents for the supply of goods and a monetary claim. A factoring agreement is concluded between the bank and the client.
- The factor pays the lender up to 90% of the transaction amount at a time and takes care of all payments with the debtor. Lending is usually provided for up to 180 days.
- After closing all settlements, the factor transfers to the creditor the remaining amount minus interest and its commission.
Factoring for suppliers is advantageous in that the seller immediately receives working capital, and the buyer pays for what he ordered.
Market situation
This segment is highly dependent on customer demand. Amid a reduction in consumption, financing conditions are being tightened. Only in such areas as electrics, computer equipment and jewelry production, funding fell by 30% in 2015. A significant role in this was played by the withdrawal of leading companies from the market, as well as the impact of inflation. With this in mind, the market reduction in 2015 amounted to 15%. At the end of the year, the total portfolio for all operations amounted to 255 million rubles. The factoring market turnover in 2015 decreased by 7% due to increased risks from customers. Until that moment, a similar decline was observed in 2009.
Despite the temporary deterioration of the situation, the market potential is huge. The number of active customers for the year has increased almost 2 times: from 6 to 10 thousand companies. The actual number of organizations that sell products on deferred payment terms is even greater. To increase the number of customers by three times is a very real goal.
Factoring VS Credit
Factoring resembles a lending scheme. But this operation has its own characteristics.
Credit | Factoring |
Bail | No collateral required |
Returns to the Bank | Redeemed by customer payments |
Provided for a fixed term. | Provided for a period of deferment |
Paid on a due day | Paid on delivery day |
The transaction amount is fixed in advance | The amount of financing increases in proportion to the growth in sales |
Additional documents required | Issued in the presence of an invoice and waybill |
Achievements
In 2015, 5 units were opened in the Urals, in Moscow, in the South-West, North-West and in the Volga-Vyatka region. In 2016, Sberbank Factoring LLC entered into cooperation agreements with METRO Cash & Carry and APESK, under which firms will receive factoring services on express terms: quick consideration of the application and decision making. Profitability of operations is higher than classical lending. The average asset turnover is two months, that is, 6 times a year, companies repay the loan body and interest.
Plans
Sberbank subsidiaries have always developed rapidly. The new organization has set the same goals. According to the forecast indicators, the business volume of Sberbank Factoring LLC by the end of 2016 should amount to 30 billion rubles, by 2017 - 90 billion rubles, and by 2018 - up to 240 billion rubles. According to AFK, in 2014 the portfolio of all companies on the market amounted to 309 billion rubles, of which 68% were in the five market leaders: VTB Factoring, Promsvyazbank, Alfa Bank, Gazprombank and Petrocommerce "
Overstated standards are recognized even in the company itself. The organization’s development strategy for the next 5 years has not yet been approved. Therefore, the published figures relate more to the terms of reference, and are not guidelines for development. The goal of Sberbank Factoring LLC in the near future is to provide services to customers of small, medium and large businesses.
It will be difficult to achieve the set levels of the company. At the same time, unlike most market participants, Sberbank has a large volume of liquidity and has access to cheap funding. That is, the organization will be able to offer lower rates in the market. And the market itself will only benefit from the appearance of a major player, having received a new impetus to development.
Services of Sberbank Factoring LLC
One of the conditions for concluding the contract is the cooperation of the supplier with the buyer for a minimum of two months. If both parties to the transaction are located within the same country, then an internal factoring agreement is concluded, if in different countries - external factoring.
Terms of Service
- The transaction currency is rubles.
- The term is unlimited.
- Deferred payment - up to 180 days.
When making a transaction, a deposit is not required. But the terms of the contract may provide for the right of regression claim. If the debtor does not repay the debt, then the company may demand the entire payment back from the client, taking into account the commission.
Company reviews
The big advantage of working with the company is that the organization is ready to finance contracts even with new market participants who are still inexperienced in their field of activity. In particular, this applies to small and medium-sized enterprises, with which banks are not ready to work under standard agreements.
Of course, the company's shares do not apply to all participants in trade and economic relations. Reviews of the company confirm that, for example, an increase in the funding limit is possible only three months after signing an agreement with the organization and only with respect to reliable partners. Indeed, in periods of a jump in the exchange rate, delays in repaying debt are inevitable. If the client has concluded a recourse contract with the factor, then he will not receive any benefits from this transaction. Transactions without this clause in the contract are more expensive, as the risks of a financial company increase.
Much depends on the deadline for submitting documents. On average, the history of cooperation of partners is checked up to 7 days. In this case, you need to provide all the detailed information about the procurement and payment terms of invoices for past periods. But if during the period of consideration of the application one of the documents expires "expiration date", then the package will have to be updated. However, this problem can be eliminated by immediately submitting a complete package of documents about the client.
E-factoring
In November 2015, the first factoring agreement was signed in electronic form between partners in Moscow and St. Pererburg. E-factoring technology eliminates paperwork, delivery costs, and manual data entry errors. All data exchange occurs through electronic systems. This technology greatly simplifies the process of concluding factoring transactions between customers in different regions or countries. Technical support for the transaction was provided by KORUS Consulting CIS, a subsidiary of Sberbank, which is the leading EDI operator in the retail market.