Factoring is an assignment of receivables by the Supplier of goods / works accomplished / services provided against the Buyer to OTP Bank (Factor).
Factoring is a unique product created to solve various economic and financial tasks as well as to promote the Client’s business and enhance the market powe.
OTP Bank provides factoring with recourse on the domestic market of Ukraine. Supplier undertakes to buy back payment demand, if the Debtor fails to fulfill its payment obligation in favor of the Factor. At the same time, Buyer is notified, that OTP Bank (Factor) right of payment demand assigned to OTP Bank (Factor), and effects payments according to the required account detail.
Factoring financing scheme
1. Supplier effects goods supply/works accomplishing/services provision.
2. Factor (OTP Bank) provides financing in the amount of not more than 70% of the assigned receivables.
3. Buyer pays in favor of OTP Bank (Factor) at the date of planned maturity.
4. OTP Bank (Factor) transfers the difference between the nominal value of receivables (invoice) and the amount of financing provided to the Supplier.
Principal Advantages of Factoring for Supplier (Client):
- Non-collateral working capital financing;
- Transformation of account receivables into cash;
- Liquidation of financial gaps;
- Speeding-up of money turnover / cash cycle;
- Possibility of providing more preferable payment conditions to the Buyers;
- Extending number of potential buyers;
- Substantial increase in sales;
- Better payment discipline of buyers;
- Decreasing payment default risks.
Principal Advantages of Factoring for Buyers:
- Obtain goods/works/services from Supplier with deferred payment (trade/commodity loan);
- Increase in purchase volumes without additional working capital injection.
Requirements to Suppliers (Clients) for factoring:
- Market presence at least for 2 years;
- Regular goods supplies/works execution/service provisioning with the deferred payment conditions;
- Dealing with regular and steady customers;
- Acceptable for OTP Bank financial standing.
Standard terms of financing:
- Financing of existing, but not overdue account receivables;
- Type of operation ‐ factoring with recourse, without collateral;
- Minimum amount of limit ‐ UAH 4 000 000;
- Currency of factoring ‐ UAH;
- Advance payment - up to 80% of the invoice amount;
- Tenor of limit ‐ 1-3 years;
- Deferment period ‐ from 14 to 120 calendar days;
- Cost of factoring ‐ upon mutual agreement.
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