This is a type of factoring in which all parties to a sale and purchase transaction are located within Russia.

UniCredit Bank provides:

• recourse factoring with the client's obligation to repay the debt to the bank if it cannot be repaid by the debtor;
• non-recourse factoring without the obligation of such compensation;
• pre-delivery factoring - financing at the stage of ordering goods;
• factoring with increased deferred payment;
• forfaiting is the purchase of long-term payment obligations of the client to the supplier / creditor.

Contact the bank's specialists to find out what package of documents is required to start internal factoring services at UniCredit Bank.

Supplier financing factoring

UniCredit Bank's supplier financing program will help you:

• Strengthen relationships with your supplier network and expect lower procurement costs
• obtain or increase a deferred payment for supplies;
• simplify the chain of interaction with suppliers - you communicate with one bank specialist accompanying your company, and not with a dozen representatives of different suppliers;
• remove part of the work from the accounting department - the bank makes an early payment directly to the supplier's account;
• remove the need to divert working capital to pay for the supply;

How it works?

If you deal with suppliers on a deferred payment basis, this usually means that the supplier includes all costs associated with your receivables in the cost of delivery.

Under the supply financing program, UniCredit Bank buys the right to claim you from your suppliers. For the supplier, this means that they can get cheap financing against your receivables through factoring - instead of covering the cash gap through unprofitable lending at their bank. And for you, this means that you can ask for a lower purchase price from this supplier and give him guarantees for a long-term cooperation.

What's more, your supply chain is significantly reduced, cash flow planning becomes more efficient, and purchasing power is growing.

What terms of cooperation can your company expect under the supply financing program? Find out by contacting the bank's specialists or by filling out.

Factoring with recourse

When factoring with recourse, the bank has two sources of repayment of the debt in case of non-payment by the debtor - the buyer and the seller. This reduces the risks taken by the factor, so the bank can expand the range of clients to provide factoring services.

As a client of UniCredit Bank, you can enjoy all the benefits of recourse factoring:

• attract factoring financing in the amount of up to 90% of the total transaction amount;
• get faster and more profitable financing for the period of deferred payment in comparison with lending;
• establish yourself as a reliable partner in working with suppliers, reducing the time for paying invoices for supplies;
• effectively manage accounts receivable and enlist the bank's analytical support in this matter.

Factoring without recourse

The largest Russian and foreign companies are serviced under the non-recourse factoring scheme, in which UniCredit Bank fully assumes the risk of non-payment of the debt by the buyer. Take advantage of a range of non-recourse factoring services to:

• increase liquidity and improve financial indicators by writing off accounts receivable from the balance sheet of the organization;
• increase purchasing power;
• reduce the amount of working capital;
• improve the ratio of debt to EBITDA.

To find out what conditions for the provision of this service you can expect in our bank, contact UniCredit Bank specialists or fill out.

Factoring with extended grace period

UniCredit Bank allows its factoring clients to receive an additional deferred payment in addition to the contractual one. In this case, the cost of the additional delay is paid by the party acting as a debtor in the transaction.

Pre-delivery factoring

Pre-delivery factoring is financing against the assignment of monetary claims that will arise in the future. This type of factoring is in demand by enterprises that sell and manufacture goods “on order”.

Pre-delivery factoring allows you to:

• refuse to work on prepaid in favor of deferred payment;
• receive immediate financing for future sales of services and goods, as well as for the production of these goods.

This type of factoring requires a deep analysis of the activities of both the seller and the buyer. After the analysis, the bank's expert will make a conclusion about what financing conditions will create the best balance between the bank's risks and the client's needs for factoring financing.

Forfaiting

Forfaiting is a financial service similar to factoring. However, this means that the client receives financing through the purchase of long-term obligations of the debtor to the counterparty (supplier, creditor, etc.)

Forfaiting allows you to:

• discount the total debt in one amount;
• obtain long-term financing for up to 7 years for the purchase of fixed assets;
• transfer the entire risk of non-payment of the debt under the contract to the Bank;

Please contact UniCredit Bank specialists to get more information about forfaiting or fill out.

Talking about factoring, what it is and how to describe it in simple terms, we end up with the following definition: a set of financial services for deferred payment, which producers have agreed with merchants. That is, the supplier sells the goods to the buyer and does not require immediate payment for it. Factoring operations are instruments that allow an enterprise to receive financing from a bank against receivables.

Economists believe that we are talking about the procedure for trading in debts, and the discovery of factoring is attributed by historians to the times of antiquity.

We turn to the description of factoring, based on expert ideas about what it is.

Factoring financing mechanism

The scheme of operation of such a financial mechanism is curious. After all, many firms pay with its help with their counterparties. Here, the absence of collateral is practiced, and limits are set differently.

The factoring scheme looks like this - the supplier of the factoring company acts in such a way that services and goods are provided to the buyer with a deferred payment, and in the meantime, documents confirming the delivery (waybills, invoices) are transferred to the bank.
Then the supplier receives money from the bank (up to 9/10 of the delivery amount).

And when the grace period ends, the bank receives the entire amount from the buyer and transfers the remaining funds, minus its commission, to the supplier company.

In this case, the factor is the bank itself, which has both the entire amount of necessary information and its own methodology for assessing the solvency of the company's counterparties.

If companies establish cooperation with the maximum number of debtors, especially by providing them with payment deferrals, then all produced volumes will be quickly and correctly implemented.

Factoring service has proven to be a successful scheme, and this enables enterprises to optimally combine their financial prospects, built on effective management cash flows, with a holistic development of production.

Types of factoring

Depending on the potential of the clientele, there are the following types of factoring:
• open or confidential (closed);
• domestic or international;
• with and without recourse.

With regression

The recourse type of factoring is the most relevant and is more popular than other types. The profitability of factoring with recourse is obvious for clients, because it is elementary insurance in case the debtor (client's buyer) for some reason refuses to pay or delays it beyond the due date - then the client returns the money to the company.

The main and significant advantage of factoring with the right of recourse is a good growth in sales, because according to these schemes, any banking organizations Yes, even with a deposit. The money is immediately credited to the account and is already working for profit, which can only be interrupted by the fact that the debtor is declared insolvent.

No recourse

In case of factoring without recourse, as it is understood by experts, the risks of non-payment on debts are assumed by the factoring organization. The risk of non-payment is immediately included in the cost of the service, so non-recourse factoring costs the seller more than recourse factoring. The factor conducts a thorough analysis and determines the solvency of the debtor. As a result, the client is guaranteed full payment.

A convenient opportunity is provided by the "Guarantee for buyers" service.

Additionally, it allows:
• work with customers on a deferred payment basis;
• provide preferential payment terms to buyers;
• start working with new buyers (by checking the solvency of potential buyers, as well as their ability to sell a given volume of goods);
• access to new regions (guarantee for new buyers in new markets and territories).

Relationships of this type carry less risk for the factor, and the commission for services, of course, is significantly lower: they are available.

How the guarantee scheme works:
• Shipment of products.
• Transfer of information on deliveries to approved buyers.
• Issuance of a guarantee for buyers 90% of the delivery amount.

If the buyer does not fulfill its obligations to pay for the delivery, it is necessary to transfer the original documents that confirm the validity of monetary claims against the buyer.
Payment under the guarantee is carried out within 4 months.

Purchasing

Another interesting type of factoring service is called purchasing (reverse).
The term "buyer factoring" is sometimes used because it accurately expresses its essence. A buyer (debtor) comes to the factor, interested in receiving goods with a delay.
He resorts to the purchasing variety if he is interested in a deal, but does not currently have the necessary funds, while the supplier does not want to cooperate without an advance payment.

International

International factoring is perhaps the only real financial instrument, allowing deferred payment for international transactions. The supplier and the buyer here are residents of different countries. But the rules of ordinary trading do not apply here.

International factors are involved in servicing foreign economic transactions, which are characterized by:
• long-term, and even indefinite action;
• regularity of deliveries;
• upward trend in trade.

open and closed

In a varied gradation of factoring transactions "for three" it is worth paying attention to the open and closed types of this pool of financial services.

With the open option, which is especially popular abroad, the debtor, being officially notified in writing of the presence of the factor, transfers funds to his account. Moreover, sometimes the factor is not included in the tripartite transaction without the consent of the debtor. And closed factoring is an operation carried out only between the creditor (seller) and the bank (or other factor). And the purchaser of services (goods) does not know about it.

The difference between obtaining a factoring agreement in a bank and a factoring company

Many entrepreneurs, for whom the services of a financial intermediary have suddenly become vital, have a choice of whom to contact - a bank or a specialized company. Today, both types of players are very successful in this market, but there is still a difference in the provision of factoring services.

To begin with, let's take a closer look at the question - what is factoring in a bank? Many users note that such an important quality as reliability is inherent in banks, they also emphasize the universality of services.

Indeed, to provide this financial service, businessmen need others, and banks that do not have restrictions in this sense are still the best option. A logical addition to factoring services is that banks offer settlement services.

But factoring companies have other advantages, the first of which is efficiency, which is provided by special business processes. But in the bank, the speed of the implementation of operations is reduced due to the workload of employees with administrative issues in work with other divisions of the same bank.

With a conventional loan, the contract is limited in time, and with this transaction, the loan is indefinite.

The conclusion suggests itself: specialized companies are constantly improving their well-established technologies, while in banks they are more conservative, which reduces the quality of factoring services, and the volume too. Along with the aforementioned efficiency, companies are more flexible in relation to the client.

The specialists of the companies have excellent knowledge of product features, and this allows them to take into account the needs of customers and tailor the product specifically for them.

In banks, a small staff and strictly regulated product parameters do not allow approaching each client individually.

Terms of registration

A factoring agreement, or what, perhaps, it would be more clear to call an agreement on the transfer of the right to a debt, is, in simple terms, the main legal document that fixes the relationship between the intermediary and the supplier (and, possibly, the recipient).

The law for this document provides for a number of nuances that are understandable at the expert level, but the main ones are the terms of factoring on financing and the monetary claim assigned in order to obtain financing.

Mandatory points should not be forgotten:
• under what conditions financing is provided and in what order it is carried out;
• description of the procedure for transferring rights to debt obligations;
• the cost of the transaction and the procedure for transferring settlement funds.

Calculation example

Let's give an example of factoring calculation.

On the 20th day of the month, the wholesale supplier signed a contract for the supply of goods with the Buyer in the amount of 500,000 rubles with a payment deadline of the 30th day of the same month.

The wholesale supplier urgently needs money, so on the 25th he concludes an agreement with the Factor, transferring to him the right to claim money from the Buyer.

Factor on the 26th pays the Wholesale Supplier 7/10 of the required amount - 350,000 rubles (this can be referred to as a factoring loan).

On the 30th, the Factor issues a payment request to the Buyer.

AT Russian Federation, where banking institutions are the main factors in these operations, the volume of factoring turnover barely reaches half a percent of the gross domestic product, while in the West it can sometimes amount to 1/5 of GDP.

On the 31st, the Buyer transfers 500,000 rubles to the Factor.

Of these, the Factor retains a commission for itself, and transfers the rest to the Wholesale Supplier.

If, for example, we are talking about a commission of 3%, then this is 15,000 rubles. That is, the Wholesale Supplier will receive the last transfer from the Factor in the amount of 135,000 rubles, and the total amount received by the Wholesale Supplier will be 485,000 rubles.

Having lost only 3% of the amount on the commission, using the factoring procedure, making simple entries in his accounting department, the Wholesale supplier received 70% of the entire payment at the right time.

Such a factoring calculation is the simplest example, indicating the simplicity of the relationship scheme itself along the supplier-factor-buyer line.

Watch a video about the concept of factoring.

How is factoring different from forfaiting and cession?

Very often, factoring and forfaiting are considered as similar mechanisms, but the differences between them are quite noticeable. The difference between financial transactions lies in the features of their implementation.

Forfaiting, which is important, is, in simple words, a very long operation that can last several years, while factoring takes a maximum of six months. The forfaiter, who pays the entire amount at once, is ready to risk everything (even political interference), and the factor, who does not give more than 90%, shifts part of the responsibility to the client, so that, in which case, at least some of his funds will be returned.

Forfaiting assets may well be sold to third parties, but factoring assets cannot.

The general purpose of additional financing does not negate the significant differences between factoring and from. The first operation is voluntary, and the assignment can be determined by law.

The assignment does not have the nature of a restriction on property, and factoring involves the transfer of cash receivables.

Pros and cons of factoring

You can always calmly resolve financial problems without harm, without changing the rhythm of current production, using an effective and modern way - financing through a factor. However, as in any transactions and contracts, factoring has its pros and cons. The main benefits are to create favorable conditions for the debt to be repaid.

Enterprises that have resorted to factoring can get out of the financial crisis. The disadvantages of factoring are the complicated terms of the contract, and risking too high an interest rate, you can lose the profit from the supply. In addition, the documentation is not easy to issue.

Some positives and negatives.

Watch a video about what factoring is in simple words:

Factoring can rightly be called the driving force of trade. It is not a luxury, but a tool that stimulates the growth of production and sales - increasing the competitiveness of goods and expanding the circle of partners, providing them profitable terms payment. This is a powerful financial tool with which the business of companies can increase their sales very quickly.

Hello! Today we will talk about what factoring is. Suppliers of goods (and sometimes services) are often faced with a choice - to work on a prepaid basis or to provide a deferred payment? In the first situation, you can lose some of the clients, in the second case - the funds to finance current activities. Factoring will help to keep the middle ground. We will talk about it in this article!

The concept of factoring

What is factoring?

Factoring- this is financing against the assignment of a monetary claim.

In simple terms, factoring can be explained as a form of commodity credit. when the rights to the debtor's debt are transferred to a third party (in this case, a factor). Thus, the supplier of goods or services receives payment from the factor faster than stipulated in the supply contract with the buyer.

The term came to us from the English language, where "factoring" (factoring) in this situation is translated as "mediation".
Both a specialized factoring company and a factoring department of a bank (which is most common in Russia) can act as a factor.

The essence of factoring is reflected in its functions:

• Supplier financing, urgent increase of its working capital;
• Management function, in other words - debt collection;
• Also, if necessary - non-payment risk insurance.

• Download the Factoring Agreement in order to ensure the fulfillment of obligations
• Download Factoring Agreement for Financing an Existing Claim
• Download Factoring Agreement for Future Claim Financing

Factoring scheme

Factoring always involves three parties:

1. Factor (factoring company or bank department);
2. Goods supplier (client, creditor);
3. Buyer (debtor);

The most common factoring scheme can be outlined in a few steps:

• The supplier ships the goods, agreeing with the buyer on a deferred payment (from a week to four months);
• The supplier concludes an agreement with a factoring company, transfers invoices to it;
• The factor finances the provided invoices, the supplier receives his payment. Usually the factor pays immediately about 90% of the total cost, the remaining 10% is paid upon receipt and inspection of the goods by the buyer. Of course, the factoring company takes a commission determined by the contract for services;
• The buyer pays for the goods to the factor.

Factoring stages

1. preliminary work . Prior to the conclusion of the contract, an assessment and analysis of a potential client, his financial capabilities are carried out. The supplier must provide information about the buyers, about the terms of delivery, payment and, of course, about cases of violation of the contract, if any, in the past;
2. Documenting. The following must be specified in the contract for the provision of factoring services:

• Subject of the contract;
• Rights and obligations of participants;
• The procedure for the implementation of financing;
• credit limit;
• The procedure and conditions for transferring the rights to the debt to the factor;
• Price of factor services, calculation procedure;
• If necessary, insurance against breach of obligations by the debtor;
• The duration of the contract, as well as other conditions.

1. Factoring transaction control:

• Do all participants fulfill their obligations (in case of violations, a claim is formed);
• Whether the assets involved meet the documented requirements of the factoring company;
• Whether the customer (supplier) or debtor (buyer) estimate should be changed.

When is factoring necessary?

The need for factoring is closely related to the growth of world trade, when increasingly large periods of time began to appear after the shipment of goods and before payment.

The need for factoring may arise in force majeure situations.

The main cases when entrepreneurs resort to it can be identified as follows:

1. If you urgently need to increase working capital, and through factoring it turns out to be cheaper than through a short-term loan. More often this reason is relevant for small enterprises, for which modern Russia very few affordable and profitable loans;
2. When to attract a buyer it is necessary to provide him with convenient payment terms;
3. To work with new customers, unstable in payment;
4. When deliveries are made from medium-sized enterprises to giant corporations, since the latter often work according to inflexible schemes with unchanged payment terms.

Factoring services are not provided:

1. Companies with a large number of buyers with current debts;
2. Manufacturers of specialized goods;
3. Firms that issue invoices not immediately, but after certain work has been completed;
4. Companies working with subcontractors;
5. Suppliers working on the terms of after-sales service.

Also, it should be noted that factoring is not possible in relation to:

1. Settlements between branches of the enterprise;
2. Debt obligations individuals;
3. budget organizations.

Factoring or credit

Factoring	Credit
Short terms, from several days to a year (no more)	Only long term possible
No deposit	Usually issued on bail
The amount depends on the sales volume of the supplier	Loan amount predetermined
Finances the current activities of the company	More often issued for business expansion and other changes
Commission is deducted from the amount. There is a scheme when the amount of debt is paid in installments (for example, part - before settlement with the debtor, part - after)	Full amount issued immediately
Smaller document flow (agreement, invoice, invoice), the agreement can be open-ended, having concluded it once, the client will receive financing after presentation of invoices and invoice	A large package of documents is required, the repayment of one loan does not guarantee the receipt of the next one. For each loan - a new contract
Debt returned by a third party	The debt is paid by the same person who took out the loan

Types of factoring

There are several classifications of factoring. The main ones are:

1. For information:

• open (the buyer knows about the contract between the supplier and the factor, the payment is made to the latter);
• closed (the buyer is not aware of the presence of a factoring company in the transaction, he pays for the goods to the supplier, and the latter is already paying off the factor).

1. By risk distribution:

• factoring with recourse (less commonly used, it implies that the factor returns unpaid invoices to the supplier and requires the return of the loan if the debtor has violated the contract);
• without the right of recourse (the factoring company assumes all risks and covers everything, even the client's legal costs caused by debt collection).

1. By the time the debt was incurred:

• real (the factoring agreement is concluded after the onset of debt obligations);
• consensual (a debt obligation is assigned in advance).

1. By residency of participants:

• domestic (all participants are in the same country);
• external (aka international factoring).

1. According to the number of factors:

• direct (one factor is involved in the transaction);
• mutual (two factors).

1. The range of services provided:

• broad (conventional) - in addition to financing and debt collection, the factoring company provides accounting, insurance and other customer services;
• narrow (limited) - the list of services is limited to the main functions.

1. By type of document flow:

• electronic (EDI-factoring) - using electronic document management;
• traditional.

Advantages and disadvantages of factoring

Factoring benefits:

1. No collateral required;
2. Soft requirements for the solvency of the supplier;
3. Acceleration and guarantee of uninterrupted turnover Money. Intended use cash flows in full (when using loans, the company must always have a permanent balance in the account);
4. The factoring firm actually organizes the collection of the client's debt;
5. The conclusion of a factoring agreement can be regarded as insurance against non-payment or insurance of currency risks in international transactions;
6. Savings on, which is paid from the moment the goods are shipped. Without factoring, a situation is possible when tax liabilities for the goods come before the supplier receives funds from the buyer;
7. Financing through factoring is not considered a loan, and therefore does not affect the firm's balance sheet;
8. Attracting buyers with a flexible schedule of payment for goods or services.

Disadvantages of factoring compared to lending:

1. High cost - factoring commission in Russia can be up to 10% of the buyer's debt or up to 30% per annum;
2. With a fast and well-established rhythm of payments, factoring is meaningless;
3. Need to provide detailed information about buyers;
4. In practice, factoring is currently applicable only to supplies paid for by bank transfer.

How to choose a factoring company

When choosing a company that provides financing under the factoring scheme, you should consider:

1. What tasks do you need factoring services for? In the event that you need a factor for long-term work with problematic deliveries - do not skimp on a large and proven factor with a wide range of services. For one-time situations, more modest options are suitable;
2. Always check reviews. In the age of the Internet, this is no big deal. Select objective assessments of past clients and, based on them, select the factor that suits you;
3. Compare the cost of services. What commission does the factor charge for its services? Is there a fee for late payment by the buyer?
4. The ability to use the Internet to exchange documents and electronic signature significantly speed up the process.

TOP-10 banks providing factoring

There are many banks that provide factoring services. Here are just the main ones:

1. Sberbank
2. Alfa Bank
3. VTB 24
4. Gazprombank
5. Credit Europe Bank
6. SME Bank
7. Bank National Factoring Company (NFC)
8. Bank "Revival"
9. Promsvyazbank
10. OTP Bank

Which bank to choose is up to you! If you have experience with any bank, then we are waiting for your feedback in the comments!

Evgeny Malyar

bsadsensedynamick

# Factoring

All about factoring operations

Factoring is a financial service through which a supplier can receive instant payment for goods sold with deferred payment. This is facilitated by a third party - a factor (a bank or a financial company).

Article navigation

• The essence and goals of factoring
• How factoring works
• Legal substantiation of factoring activities
• The use of factoring in public procurement
• How does a factoring company work and how does it differ from a collection company?
• Types of factoring and their characteristics
• Specifics of the closed type of factoring
• The cost of factoring services
• Accounting and tax accounting of factoring
• Advantages and disadvantages of factoring

Factoring is a type of financial service that is becoming more and more in demand in the economy. In Russia, its volumes exceeded half a percent of the gross domestic product (data for 2020), and at the same time continue to grow. Foreign experience shows that payment through factoring can provide the turnover of one fifth of the national GDP.

The essence and goals of factoring

Factoring is an effective tool for optimizing receivables. If we convey the meaning of this statement in simple words, then such a transaction is beneficial to all parties involved in it:

• for the buyer is available to receive goods with a deferred payment;
• the seller receives instant payment for deliveries;
• remuneration of the factor stimulates his participation as a third party.

How factoring works

The essence of factoring is briefly described by the following scheme:

• The factor provides financing under the assignment of the monetary claim of the purchase and sale transaction.
• The buyer receives the goods from the seller. From that moment on, he owes the person who paid for the delivery.

So, factoring as a way of financing the activities of organizations is based on the assignment of the right to claim the buyer's debt to the supplier in favor of the factor. In this regard, the following definition seems to be fair: factoring is a financial service with which the supplier can receive instant payment for goods sold with a deferred payment. This is facilitated by a third party - a factor (a bank or a financial company).

The service is paid, as the form of financing involves the use of borrowed money. At the same time, the conditions under which factoring is provided are more affordable than a loan, and documenting is simplified.

Participants of the factoring agreement

The following subjects are involved in the factoring process:

• a seller interested in receiving the proceeds for the goods sold or services rendered as soon as possible (creditor);
• a buyer to whom factoring allows increasing the turnover of funds with minimal costs by providing a deferment (debtor);
• a factor that provides factoring financing on a fee basis.

Most often, the debtor is informed that the right of claim has been transferred by the creditor. In other words, he knows that he needs to pay a third party (factor).

For ease of understanding how factoring works, here is a simple figure illustrating the processes and their sequence:

Factoring scheme with explanation of actions:

1. The lender ships the goods.
2. The creditor provides the factor with documents confirming the shipment.
3. The factor pays a part (up to 90%) of the cost of the shipped goods.
4. The buyer makes a calculation with a factor.

Legal substantiation of factoring activities

The concept and essence of factoring in the Russian legal field are disclosed in the following legislative acts:

• Civil Law (Civil Law of the Russian Federation) is a document that defines the official term "factoring". The wording describes the transfer of funds for the provided goods (service) in exchange for the creditor's monetary claim (Chapter 43 of the Civil Code of the Russian Federation).
• UNIDROIT International Convention. In almost every country, the model law on factoring is based on the generally accepted document Convention on International Factoring (abbreviated as UNIDROIT), which takes into account its possible features to the greatest extent. In particular, a restriction has been established for individuals, since this financial instrument should not be applied to consumer goods.
• Tax legislation (articles 265, 269 and 271 of the Tax Code of the Russian Federation).
• Federal legislation (395-1-FZ "On banks and banking"dated 04.12.1990).

The use of factoring in public procurement

The widespread introduction of factoring in Russian economy also applies to public procurement, which almost always involves long-term payment deferrals. Enterprises that have won tenders and received lucrative orders and contracts face the problem of a lack of working capital. Their deficit can be filled by lending, but this method is expensive and difficult to implement due to the complexity of documenting.

In practice, government agencies acting as customers refuse to recognize changes in the details of the payee. They argue this by the fact that according to 44-FZ it is impossible to change the terms of the contract in the course of its execution.

Legal regulation assignment of claims in this case is indeed recognized by many experts as imperfect. Real arbitrage practice, nevertheless, suggests that in the absence of a direct description of the mechanism, factoring of public procurement is not in itself prohibited. The contract remains in force, its parties (in particular, the performer or contractor) do not change. The assignment of the monetary claim was recognized as legal.

It will be easier to overcome the possible difficulties of using factoring when paying for tender orders under 44-FZ if the official permission of the Ministry of Finance of the Russian Federation for the assignment of debt under a specific agreement is obtained in advance.

How does a factoring company work and how does it differ from a collection company?

Factoring functions can be performed by banks and specialized organizations. A narrow focus plays a positive role, expressed in the ability to provide Additional services. In addition to the main activity, namely financing against the assignment of a claim, factoring firms:

• insure the risks of non-payment of debts;
• keep accounting records of the client (most often the creditor);
• collect receivables;
• finance the supplier.

According to the law, a factoring company includes at least two of the listed related services in its range of services.

The financial result is expressed in payment for the service (in Russian realities - up to 20% of the calculation amount).

At its core, a factoring company resembles a collection firm. Enterprises of these types redeem debts, and then, one way or another, exercise the right to claim in monetary form. The difference between them is manifested in the following features:

• Factoring portfolio amount*. Creditors can turn to debt collectors to collect relatively small debts.
• The amount of remuneration. Collectors are most often used by banks and others. financial institutions when the debt is actually classified as uncollectible. The right to claim is sold very cheaply - for about a quarter of the face value.
• Methods. Factoring firms operate within the law. About collectors, unfortunately, there is a slightly different opinion.
• Debtor notification. As already noted, it is usually necessary to warn the debtor about the assignment of the right to claim in factoring. Turning to the collector, the creditor may not do this.

*Factoring portfolio is the total amount of outstanding payments transferred to the factor.

An example of a successful factoring firm is NFC, which has been operating in the financial services market for more than a decade.

Types of factoring and their characteristics

Modern factoring is characterized by a variety of forms and types. For convenience, they are summarized in the table:

Criterion		Description
Moment of Funding	consensual	Pre-delivery factoring - the contract is concluded before the transfer of the goods
	Real	The goods have been handed over, the contract is concluded on the basis of an invoice
Territorial	Interior	All parties to the factoring agreement operate in a single national legal field
	International	Import or export - depending on the direction of the commodity flow
Contract form	convection	Also called open. The buyer is informed that a factor is involved in the transaction
	Confidential	The second name is "hidden". The supplier receives working capital from the factor, and as soon as the money is received from the debtor, he pays this amount. In this case, the buyer may not be privy to this scheme. Applies to regressive trades only (see below)
Conditions of payment	Regressive	In case of non-payment of the debt, the factor has the right to transfer the right of claim back to the creditor
	No recourse	Regardless of the solvency of the debtor, the right to claim remains with the factor
Service scope	Full	The contract provides for factoring services for all operations of the enterprise
	Partial	Factoring of individual operations, each of which has its own contract

Separate consideration deserves security factoring - a financial instrument for providing a guarantee of fulfillment of obligations to the factor. Its application is regulated by paragraph 1 of Article 824 Civil Code RF.

The meaning of this measure is to protect the agent's interest in case of late payment of goods to the supplier. The role of security property in this case is played by the right of monetary claim. Thus, the client (seller), having received payment for the goods delivered by him, is guaranteed to pay off the factor.

Of interest is also such a variety as a simple assignment of the right to claim debt. Factoring without financing involves the absence of payment to the creditor from the factor. After settlement, the supplier receives his funds, and the agent receives the agreed remuneration.

When factoring without financing, the trouble-free receipt of funds to the creditor's account is assumed:

• within no more than five days after receipt of the goods, confirmed by issued invoices;
• after the debtor pays the debt to the factor account.

Specifics of the closed type of factoring

Closed (aka - hidden or confidential) factoring was mentioned in the table above. Unlike the open (convection) type, in this case the debtor is not notified of the transfer of the right of claim to a third party (factor). It should be noted that the cost of confidential factoring is higher than that of convection factoring. Mutual settlements are made as follows:

• the goods are shipped to the debtor against invoices;
• the same primary accounting documents used by the creditor to receive payment for the goods from the factor;
• the buyer pays the goods to the supplier;
• the supplier transfers the received funds to the factor.

The scheme is disclosed only in case of late payment of the debt. In this case, the right to claim passes to the factor.

The cost of factoring services

Factoring services are less common in Russia, unlike conventional lending. Potential client today it is difficult to figure out how much it costs and compare the offers of different market operators: there is very little publicly available information. It remains to operate with logical constructions, summing up the components of the cost of the service. The factoring price includes:

1. Medium interest rate in Russia for the use of borrowed funds. A loan is a paid type of service, it may differ in each region of Russia, but in general it is subject to an average analysis.
2. Preparation, processing and verification of documents. It is set by each institution at its own discretion.

In addition to these main components, factoring pricing is influenced by other factors:

• positioning in the accounting policy accepted in the company or bank;
• turnover and financial condition the applicant company;
• duration of the delay;
• the number of buyers who regularly work with this seller;
• the price of a batch of goods;
• and reputation of the client;
• the level of competition.

The inaccessibility of information about the conditions of factoring is expressed in the desire of many potential users to get some kind of “regulation on the factoring department” of a particular bank, in which everything is supposedly spelled out. It is not known, however, whether there is such a document in nature, or the percentages are determined speculatively for each client individually.

As a result of the influence of various factors, the so-called effective rate, expressing the real percentage of remuneration for using factoring. In real life, it somewhat exceeds the bank interest on business lending (a difference of up to 7%) in the case of a regressive agreement, when the responsibility lies with the client. An increase in risks entails an increase in the price of the service.

Some factoring banks position this service among others, including those provided by factoring companies that are part of the financial groups headed by them. Among them:

• VTB Factoring - in the VTB Group (detailed article);
• RB-Factoring - in the Rosbank group;
• GPB-Factoring is in the Gazprombank group.

Other banks provide factoring directly as part of their credit programs.

The general rule is that the efficiency of factoring for a bank should not be less than that accepted in the framework of the general accounting policy. Otherwise, it makes no sense to divert current assets to it.

Accounting and tax accounting of factoring

Reflection in accounting of factoring transactions is made by entries in the balance sheet.

Supplier postings:

Correspondence		Operation description
Dt	ct
62	90-1	Reflection of sales revenue (full amount)
90-3	68	Separation of VAT from revenue
76-5	91-1	Income for the amount of assigned rights in favor of the factor (“other income”)
91-2	62	Disposal of a cash claim to a factor
51	76-5	Actual receipt of funds from the factor
91-2	76-5	Accounting for the remuneration due to a factor
19	76-5	Accounting for VAT on remuneration to a factor
68	19	Acceptance of VAT on remuneration to the factor to be deducted
51	76-5	Receipt to the account of the balance of the debt minus the remuneration of the factor

Factor postings:

Correspondence		Operation description
Dt	ct
58	76-5	The financial investment is accepted for accounting for the amount of the factoring agreement minus remuneration
76-5	51	Paying off a debt to a creditor
51	76-7	Receipt of funds from the debtor for the full amount of the goods
76-7	91-1	Accounting for income from the disposal of an investment
91-2	58	Write-off of the cost of investment
91-2	68-4	Calculation of VAT on the difference between the amounts of receipts from the debtor and the initial debt

Tax accounting of factoring transactions has a number of features. As in other similar situations, there are two directions - profit and VAT. The tax base for the factor is the amount of remuneration (the difference between the receivables and the cash claim). The formula for calculating income tax corresponds to general requirements chapter 25 of the Tax Code of the Russian Federation and depends on the region (to facilitate calculations, you can use the tax online calculator).

Discrepancies sometimes arise when determining the VAT base. They are due to the fact that previously banks were the operators of factoring services, and their financial results were not subject to value added tax.

However, factoring is not included in the number of transactions exempt from VAT and listed in letter No. 03-2-06/1/1371/22 dated June 15, 2004. Thus, the factor is obliged to transfer this tax to the budget on a general basis.

The problem also arises when counting financial result the seller who cedes the right of claim to the factor. Since most often the difference between the amount of financing received from the factor and the initial price of the good (service) is negative, factoring in the cash flow statement shows a formal loss.

Article 269 of the Tax Code of the Russian Federation establishes the maximum percentage of costs recognized as allowable expenses on debt obligations: it is equal to one and a half refinancing rate of the Central Bank of the Russian Federation. An example of calculating the tax base for a typical factoring operation with a discount on the amount of the monetary claim:

Company A assigned the debt of company B with a delay of 5 days to factoring company C in the amount of 4.5 million rubles. with an 8% discount. This means that enterprise A incurs a loss in the amount of the discount:

An expense to ensure the fulfillment of a debt obligation is recognized as reasonable in the amount of:

(13 - interest rate of the Central Bank)

The resulting difference between tax and accounting in the amount of 360,000 - 96,164, 38 = 263,835.62 rubles. written off to the creditor's losses by posting Dt99 - Kt68.

Advantages and disadvantages of factoring

Factoring, as a way to compensate for the shortage of working capital, has a number of similarities with bank lending, although there are significant differences. Each financial service has its pros and cons.

Factoring makes sense to use to finance trade operations (liquidation of cash gaps), and a bank loan - for investment and innovation, that is, investment in fixed assets. The factor, in addition to its main function, controls receivables and assumes a significant part of the risks of non-payment.

Collateral for factoring, unlike a loan, is not required. Features of the legislation of the Russian Federation provide a number of tax advantages (the taxable profit base is reduced by the amount of the factoring fee, and when VAT is charged, the goods are considered shipped but not paid).

Other advantages of factoring relationships for the supplier include the following conditions:

• unlimited amount of financing;
• "elasticity" of financing, that is, its correlation with the growth or decline in sales;
• compliance of payment for services with the term of real commodity lending;
• fast execution and payment for delivery - in some cases, an application can be submitted to the bank online.

Buyer Benefits:

• additional possibility of commodity crediting even if it is not offered by the supplier;
• the possibility of extending the delay;
• preferential prices and discounts corresponding to prepayment;

However, factoring objectively has disadvantages:

1. Price. The effective factoring rate is much higher than annual interest jar.
2. Incomplete amount of funding. As a rule, the share of the paid part of the supply does not exceed 90% (usually less).
3. Limiting the number of buyers per seller.

Another disadvantage is the selective availability of the service. Not all companies can use factoring. In particular, firms are unlikely to be able to agree with the factor:

• dealing with many small debtors;
• engaged in construction or other activities related to subcontracting;
• selling products with subsequent service;
• invoicing advance payments.

In addition, the factoring service, unlike bank loan not available to individuals.

An important limiting condition is the systematic approach. One-time factoring transactions are extremely rare - financial companies prefer to work on a regular basis. The insufficient use of the factoring mechanism in Russia, in particular for online stores, is due to the low awareness of managers and financiers about the possibilities of this service. To be aware of them, it is recommended to view economic news more often.