Factoring is an effective instrument of payments, financing, reducing risks of non-payment for contacts of purchase and sale. Factoring is a variety of a trade commission operation in conjunction with crediting of liquid assets. The operation is bound up with the negotiation of unsettled invoice-accounts to a financial agent (the bank) for goods, execution phase, rendering services.

Three parties participate in factoring operations:

• A factor – intermediary (the Bank)

• A supplier – an enterprise which supplies goods, execution phase, rendering services to its counterparts on tied credit conditions.

• A buyer – an enterprise having debts with time for payment at present or in future.

Factoring operations are regulated by Civil Code of Russian Federation (part 2) and Federal Law "About Banks and Banking".

The Factoring Agreement is a legal foundation in interrelations between a credit institution and a customer. It determines parties' obligations and responsibilities . The contract for factoring service is awarded, as a rule, for one year. The type of factoring, amount of factoring credit, interest rate, amount of commission remuneration, guarantees for fulfilment of mutual obligations and property accountability for their nonfulfillment, the procedure of making out a document and other conditions at parties' discretion are stipulated in the Factoring Agreement.

Factoring has a lot of advantages for a Supplier:

• Small and medium-sized companies can easily obtain financial facilities to continue development and supply goods on credit.

• Supplier receives the major part of its gain within 3 days after suppling goods, execution phase, rendering services

• Opportunity to plan better cash flows

Factoring has a lot of advantages for a Buyer:

• Obtaining of a short-term tied credit by prepayment price.

If you have any questions, please, feel free to contact us:
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