Factoring means financing of short-term receivables from business relations, i.e. Tatra banka shall buy customer's invoices from the supplier (client), and shall provide 60-90% of the nominal value of the invoice upon assignment of the receivable to Tatra banka. The difference between the financed and paid amount of the receivable is transferred to the client's account upon payment of the receivable by the customer. In the event of fulfillment of the datermined criteria, Tatra banka buys receivables amounting to 100% of their nominal value.
Tatra banka normally buys receivables which are due and payable between 14 and 180 days, however, maximum 365 days.

Example:

The company supplies any quick-turnover goods to shopping chains.
Under a contract with the customer, the supplier issues invoices for the supplied goods, which are due and payable within 60 days.
The client shall issue an invoice in the amount of 185.000 EUR. Upon submission of the invoice accompanied by standard documents for purchase, the client normally receives, within 24 hours, an advance payment credited to his account and amounting to 80% of the invoice value, less the commission fee and the interests in the agreed rate. The commission fee is 0.5% of the invoice value and the interest rate is 7 % p.a. from the financed part.

Upon payment of 100% of the invoice value by the customer, the client shall receive the balance payment of 20%.

Why to use the Tatra banka factoring?

• availability of factoring for the client – wide network of Tatra banka branches in the whole Slovakia (more than 100 branches)
• complex financial service "under one roof"
• many year experience with provision of factoring services
• membership in the international association of factoring companies, International Factors Group (IFG), allows our clients to trade with international business partners all over world under the conditions comparable to those prevailing in the domestic market
• we are a constituting member of the Association of Factoring Companies (AFS)
• we provide factoring in the form of both discount and overdraft facility

• a service comparable with the overdraft facility, available also to the entities which are not able to secure the loan by e.g. a mortgage over a real estate or any other property guarantees
• the possibility of financing also newly established companies
• factoring does not increase the company's credit involvement because it has an off-balance character and is accounted in sub-ledger accounts
• increased competitiveness and strengthening the firm's position in the market by e.g. providing better payment conditions to the customers than the competing firms
• refinancing of receivables enables to bridge the period between the date of the receivable and collection thereof, thus improving the company's cash-flow
• flexible financing –the amount of the provided capital depends on the volume of realised deals with the customer
• allows the companies to attend to the business, and to leave the collection, administration, and enforcement to Tatra banka
• by raising the capital, there is an opportunity to utilize the benefits of those suppliers which offer discounts in case of advance payment or short term maturity
• in the event of non-recourse factoring provision of security against insolvency or customer´s unwillingness to pay the receivables
• Tatra banka normally finances 60-90% of the nominal value of the receivables. In the event of fulfillment of the determined criteria, Tatra banka may buy receivables amounting to 100% of their nominal value.

For whom is factoring determined?
Factoring is an appropriate method of financing for large, medium, and small firms,which:

• realise regular supplies for solvent customers or need additional operational capital because of seasonal fluctuations
• sell with deferred maturity by more than 14 days
• require flat payment as a payment condition

What are the costs of factoring?

The costs of factoring include:

• the factoring fee which comprises the fee for preparation of the contractual documentation and financial analysis of the transaction, and the commission fee for administrative processing of the purchase of receivables
• the interest rate (the applicable BRIBOR or LIBOR + bank´s risk margin or Base Rate for overdraft facilities)

The amount of the fees depends on the total volume of the sale realised via factoring, the number of customers, the volume of assigned invoices and the average value thereof, as well as on the risk of the given transaction.

What types of factoring are provided by Tatra banka?

Domestic factoring - purchase of receivables to domestic customers
International factoring – purchase of receivables to international customers
Recourse factoring – is a method of purchasing receivables, with the option to re-sell the receivable back to the client or to apply some of the security tools in the event the customer fails to pay the full amount of the receivable or fails to pay the receivable as such. The supplier warrants to Tatra banka for proper payment of the receivable amounting.
Non-recourse factoring – is a method of purchasing receivables, where the risk of failure to pay the receivable by the customer due to insolvency or unwillingness to pay is assumed by the bank

What documents are required in case of being interested in factoring?

• the request for factoring/purchase of receivables (the request form is available in the Tatra banka internet page - www.tatrabanka.sk /Medium and large firms or small entrepreneurs/ Factoring)
• the client´s financial statements for two completed fiscal years and for the completed quarter of the relevant year
• the contract between the client (supplier) and the customer or a copy of the applied order in the event of non-existence of the contract
• the list of open receivables to the customers
• in the event Tatra banka has not available the customer's current statements, such documents shall be required, with the client's consent, from the customer
• a brief presentation of the firm, its history, position in the market, and the management
• in the event of insurance of the receivables, a copy of the insurance policy and a copy of the approved insurance limits for individual customers