Financing against concession of monetary claim at the Bank – factoring, is done in two ways – by means of classical and recourse factoring.
Classical factoring – a short-term financing instrument, in case of which the Factor delivers or undertakes to deliver to the client monetary funds against concession of the Client’s monetary claim towards the Debtor, which results from supply of goods or provision of services to the Debtor by the Client or performance of works for the Debtor, and the Client concedes to the Factor or undertakes to concede the respective monetary claim.
Types of classical factoring:
- Closed factoring – in case of this type of factoring the Debtor isn’t notified about the factoring transaction and doesn’t bear responsibility for proper performance of the factoring obligations.
- Open factoring – in case of this type of factoring the Debtor is notified that there is a Factor in the transaction and makes all payments at the Factor’s expense, thereby performing his/her obligations caused by purchase of goods/receipt of services or works.
- Classical factoring without regress, in case of which, if the amount payable by the Debtor to the Bank isn’t paid, then the Client bears no liability towards the Bank.
- Classical factoring with the right of regress, in case of which the Bank has the right of regress towards the Client, which means that if the Debtor fails to perform his/her monetary obligation towards the Bank, then the payment is made to the Bank by the Client.
Recourse factoring - a short-term financing instrument, in case of which the Factor provides funding to the Client’s suppliers against concession of the suppliers’ monetary claim towards the Client, which results from supply of goods, provision of services, or performance of works for the Client by the suppliers, and the Supplier concedes to the Factor or undertakes to concede the respective monetary claim.
Conditions of financing by factoring:
In order to make use of factoring, the commercial relations between the Debtor and the Supplier should meet the following conditions:
- The commercial relations between the Debtor and the Supplier started minimum 6 months ago and at least two supplies have been made, for which full payment is done.
- Supply of goods/provision of services/performance of works is of continuous character and isn’t a one-off transaction.
- The maximum period of deferment of the payment receivable for supply of goods/provision of services/performance of works is 120 days.
- Payments for supply of goods/provision of services/performance of works is made in non-cash manner.
|Currency of financing by factoring
|Fee for consideration of the application for factoring, which is charged at the time of submission of the Client’s application to the Bank
||AMD 15 000|
|Limit of financing by factoring
||A separate limit of financing by factoring is approved for each Debtor/Supplier, depending on the Client’s and/or Debtor’s creditworthiness|
|Maximum maturity of the limit of financing by factoring
|Term of financing (maximum term between provision of the financing and performance of the obligations under the conceded claim)
|Maximum size of financing from the conceded claim amount /at the first stage of financing/
|Annual interest rate
||Approved by the Bank’s Management Board|
|Commission fee (commission fees are charged either from the Client (Supplier) or from the Debtor in accordance with the agreements signed with the Client)
||The Bank can define payments by decision of the GCC or the Management Board|
Tariffs of financing by factoring
|Approval of the limit and commission fee for increase of the limit||
0.25% of the limit
Minimum AMD 5.000, maximum AMD 200.000
|Minimum amount of the financed transaction||Minimum AMD 500.000|
|Re-approval of the limit||AMD 10 000|
|Annual interest rate (is accrued towards the financed amount)||Starting from 13%|
|Commission fee (is calculated for the amount of the conceded liability)||
Minimum AMD 5000
|Fee for consideration of the application||AMD 15 000|
|Tariff of the notification||AMD 500|
|Penalties for overdue amount||Daily 0.2% of the liability amount|
|Early repayment of factoring||No penalty is applied|