InvoiceCafé is an online SME financing platform. Thus, we can single out the main economic advantages of factoring as a special form of lending. Assignment of the right to claim a debt. The client assigns the right to claim to the bank

Factoring(from the English factor - agent, factor) is the transfer of the supplier's monetary claims to the buyer to a bank or a specialized factoring company for a certain fee.

The essence of factoring is that a bank or a factoring company (factor firm) buys from its exporting clients their payment claims to importers, pays suppliers, as a rule, 80-90% of the transaction value immediately, and the rest - within strictly defined terms regardless of receipt of payment from the buyer. The possible risk of non-payment on the part of the buyer passes to the factor firm.

This method provides the supplier with a number of advantages:

1. accelerates the receipt of funds for the exported goods;

2. releases from the risk of default;

3. allows you to save on administrative and accounting costs.

In accordance with the Convention on International Financial Representation (Factoring), adopted in 1988 by the International Institute for the Unification of Private Law, a transaction is considered factoring if it satisfies at least two of the four requirements:

1. the availability of lending in the form of prepayment of debt claims;

1. accounting of the supplier, primarily accounting for sales;

1. debt collection;

1. supplier insurance against credit risk of non-payment.

Factoring operations are divided into the following types:

1. internal, if the supplier, buyer and factor firm are located in the same country, and international, when any of the three parties is in another state;

2. open, if the debtor is notified of the conclusion of the factoring agreement, otherwise - closed (confidential);

3. with the right of recourse, those. requesting the supplier to return the amount paid, and non-recourse;

4. with the condition of crediting the exporter in advance payment or payment by a certain date.

The fee charged to the supplier by the factoring firm consists of four parts:

1. fees for factoring services;

2. payment for performing the delcredere function;

3. loan fees;

4. profit factor.

The commission is charged as a management fee for factoring services. Its size in most countries ranges from 0.5-3% and depends on the annual turnover of the supplier, the sales structure, the volume of work of the factoring company, the degree of credit risk, and market conditions.

The delcredere function is estimated at 0.2–0.4% of the amount of financing and depends on the solvency of the debtor. However, the payment for its implementation, as a rule, is not higher than the premium for credit insurance.

The fee for a loan provided to a supplier in the form of prepayment of transferable debt claims is typically 2-4% higher than the current bank rate for short-term lending to clients with similar creditworthiness and volume of transactions. This is due to the risk factoring operation.

Forfaiting(from French a forfait - waiver of the right) is the transfer from the supplier to a bank or a specialized company (forfaiter) of monetary claims against the buyer by selling bills of exchange or other debt claims.

In this transaction, the forfaiter assumes the risk of possible non-payment by the importer without the right of recourse (return) of documents and obligations to the exporter. He acquires debt claims minus interest for the entire period for which they are issued. The forfaiting company can keep the documents at home or resell them to another similar company.

Forfaiting provides a number of advantages for the exporter:

1. significantly accelerates the flow of funds for the exported goods, and, consequently, the turnover of capital;

2. releases from the risk of non-payment and currency risk;

3. improves the balance of the enterprise;

4. releases from the risks associated with fluctuations in interest rates.

disadvantage Forfaiting costs for the exporter are significant costs when transferring debt claims and risks to the forfaiter.

The development of forfaiting is closely linked to the rapid growth in the export of expensive equipment and the increasing role of credit in world trade. This method is most widely used in Germany, France, Switzerland, Great Britain.

There are certain similarities between export factoring and forfaiting. In both cases, a credit provided in a commodity form is transformed from a company loan into a bank one, a third party appears in the relationship between the buyer and the supplier, and the exporting enterprise is released from a number of functions not related to production.

However, there are differences between these forms of bank lending. Forfaiting services for exports involve medium-term (from 6 months to 3-5 years) lending for fairly large amounts, and factoring - short-term (from 30 to 120 - 180 days) financing of medium-sized contracts. In factoring, unlike forfaiting, a bank assumes only a part of the exporter's risks. In addition, forfaiting is a one-time operation associated with the collection of funds under a specific document, while export factoring usually involves constant communication between the parties and the availability of a comprehensive service system. The bank's obligation in a factoring operation can be carried out both with the right of recourse to the exporter and without the right of recourse. In contrast to factoring, the obligation of a forfeitor bank is exclusively non-recourse, allowing the exporter to write off accounts receivable when supplying industrial products for a long period. Another characteristic feature of forfaiting is the presence of a secondary market where resale of acquired commercial bills is possible. And finally, as noted above, factoring can be export, import or domestic. Forfaiting arose and still remains a form of lending to foreign trade operations.

Differences

A comparative description of these forms of transactions will help a person to better understand how factoring differs from forfaiting. The main difference lies in the nuances of these financial transactions. The duration of factoring is no more than six months, but forfaiting can take several years. The one who works on forfeiting assumes all the risks, undertakes to fulfill the obligations of the debtor. And the factor, if the transaction does not take place, will be able to demand their funds or use insurance.

The duration of factoring is no more than six months, but forfaiting can take several years.

The factor initially gives the supplier only part of the money, and the rest - often only after all obligations are fulfilled. And the forfaiter settles with the supplier immediately, but then he will be able to resell his obligations.

So, the exact list of the main differences:

Term. The factoring operation lasts six months, and the forfaiting operation takes several years.
Risk. Forfaiter takes on more risks.
Payment. The factor gives the supplier part of the money, and the forfaiter gives everything at once.
Resale. Forfaiting assets, unlike factoring assets, can be sold.

In conclusion

Despite some similarities, these two types of transactions should be clearly distinguished so that there are no problems with counterparties. After all, they are often used in the interaction of sellers and buyers.

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INTERNATIONAL BANKING INSTITUTE

Faculty of Distance Learning

Course work

By discipline: "Organization of the activities of a commercial bank"

On the topic: "Factoring and forfaiting as forms of lending to trade operations"

I've done the work:

3rd year student

groups ZF-15 (25 FB-72)

Shakhova T.I.

record book number 7891

St. Petersburg

Introduction
Chapter 1 Factoring

1.1. Factoring, its essence
1.2. Types of factoring operations
1.3. Types of factoring agreements
1.4. Benefits for the participants of the factoring agreement

Chapter 2 Forfaiting

2.1. Forfaiting, its essence
2.2. Main directions of forfaiting development

2.2.1. Secondary market and investments in forfaiting assets
2.2.2. Syndication
2.2.3. Floating Rate Financing

2.3. Forfaiting market size
2.4. Stages of preparing a deal
2.5. Advantages and disadvantages of forfaiting financing

Conclusion
Bibliography
Attachment 1
Appendix 2
Appendix 3
Appendix 4

Introduction

Both the exporter and the importer may need short-term financing to carry on as a going concern, without waiting for funds to be received from certain operations. As you know, working capital is vital for the operation of trading companies. Working capital problems can be avoided by using short-term financing instruments. Intermediary companies can offer financing if the entrepreneur has any guarantees of receipt of funds from trading partners. This encourages the entrepreneur to reduce the time gap between investing and making a profit. Among the most common forms of trade finance are factoring, forfaiting, bill discounting and financing through a documentary letter of credit. In connection with the development of banking services, with the renewal of trust between the client and the bank, two relevant methods of financing can be distinguished: factoring and forfeiting.

Factoring- this is an operation in which an assignment of receivables is carried out in order to increase the speed of cash turnover; reducing the cost of maintaining an account; obtaining a guarantee of debt repayment.

Forfaiting is a form of negotiable lending suitable for any commercial transactions, and the borrower is not required to pledge all or a significant part of his business. Forfaiting is called a form of a kind of transformation of a commercial loan into a bank loan.

The relevance of this topic lies in the fact that in view of the current situation in the economy and the fact that not all enterprises have recovered from the crisis, many of them are experiencing difficulties in lack of working capital, bankruptcy of partners, as a result of which there are interruptions in payment for goods delivered and rendered services. Some of these problems can be solved by tools already recognized in recent years - factoring, or, as the domestic legislation says, financing under the assignment of the right to claim, and forfaiting.

The purpose of the course work is to identify the advantages and disadvantages of factoring and forfaiting, the difficulties of their implementation in our country.

To achieve the goals set, it is necessary to solve the following tasks:

1. In the first chapter, it is necessary to reveal the concepts of factoring, give descriptions of the types and types of factoring agreements, and consider the benefits for all participants in the transaction.

2. In the second chapter, analyze the mechanism for the implementation of the forfaiting transaction, analyze the directions for the development of forfaiting, determine its advantages and disadvantages.

In order to reveal the concepts of factoring and forfaiting, to identify the relevance of the use of these financial instruments in the course work, the legislative acts of the Russian Federation, specialized literature, data from Internet resources were used and analyzed.

Chapter 1. Factoring

1.1 Factoring, its essence

Initially, factoring, known since the 16th-17th centuries, arose as an operation of specialized resellers, and later merchant banks were included in it. But only in the 60s of our century, factor operations replaced commercial credit in the form of bills of exchange and began to be widely used to service the process of selling products. This was caused by increased inflationary processes and instability in the economies of a number of countries at that time, which required faster sales of products, i.e. acceleration of the transfer of capital from the commodity form to the monetary one. The promissory note form of payment widely used in market economy countries does not always guarantee the timely receipt of funds and the reimbursement of the actual costs of production. Therefore, the problem of receivables for suppliers has become of paramount importance.

As noted above, one of the most promising types of banking services is factoring - a risky but highly profitable business, an effective financial marketing tool, one of the forms of integrating banking operations that are most adapted to modern economic development processes. The term "factoring" from English - intermediary, agent.

Many enterprises are familiar with situations when the goods have already been shipped, but the payment for it has not yet arrived. In order not to be left without working capital, this problem can be solved by concluding a factoring agreement with the bank (Appendix 1).

Factoring is a type of financial services provided by commercial banks and their subsidiary factor firms to small and medium-sized firms. Its use ensures the constant availability of working capital to finance the current activities of the enterprise.

According to Art. 824 of the Civil Code of the Russian Federation, a factoring agreement is a financing agreement against the assignment of a monetary claim, according to which:

- one party (financial agent) transfers or undertakes to transfer funds to the other party (client) on account of a monetary claim presented by the client (creditor) to a third party (debtor) and arising from the provision by the client of goods, performance of work or provision of services to a third party;

- the other party (client) cedes or undertakes to cede this monetary claim to the financial agent.

After the conclusion of the contract, the bank transfers to the seller most of the debt (from 70 to 90% of the amount of the ceded claim), and the rest of the funds minus the commission - after the repayment of the debt.

It should be noted that in practice, not every supplier can count on factoring financing. Factors such as the age of the company, the stability of the business and, most importantly, the prospects for its development are important. Before concluding a factoring agreement, the financial agent evaluates the volume of supplies and the number of debtors whose debt the organization wants to transfer for servicing. The greater the amount of financing, the higher the profit of the factor and the more profitable factoring for the supplier.

The factoring agreement concluded by the financial agent with the supplier defines the main terms of financing against the assignment of receivables (types of commissions and their amount, conditions for providing financing). As a rule, a factoring agreement is concluded once and is automatically renewed every year.

The basis of factoring is a continuing relationship for the financing of the supplier by the financial agent, i.e. regular financing as receivables arise. The supplier gets the opportunity to plan his financial flows regardless of the payment discipline of the buyers, as he is confident in the receipt of funds from the bank. Providing the company with real cash, factoring allows you to focus on the main production activity, accelerates capital turnover, increases the share of productive capital and, accordingly, increases profitability.

When concluding a factoring agreement, the client must confirm:

- the presence of a monetary claim (to present an agreement concluded with the debtor; documents confirming the delivery of goods; invoices, etc.);

- the ability of the debtor to pay the debt (in this case, the composition of supporting documents is determined by the bank).

The client or the bank must send the debtor a written notice of the assignment of the monetary claim. The document must indicate the contract number and the amount of the debt, as well as the details of the bank to which the payment should be transferred.

Under a factoring agreement, both existing and future claims can be assigned. The latter means that the goods will be shipped to the buyer in the future and the bank will have the right to demand payment of the debt at the time of shipment.

From paragraph 1 of Art. 824 and Art. 831 of the Civil Code of the Russian Federation it follows that the terms of the contract may provide for the transfer by the financial agent of funds to the client against the assignment of a monetary claim by purchasing a monetary claim or lending funds. The form of financing predetermines differences in the composition of liabilities arising from a financial agent, as well as differences in the reflection of factoring operations in accounting and tax accounting.

It is easier for the supplier to conclude a factoring agreement with the bank where he has a current account. The Bank has information about the status of the current accounts of its customers, so it can quickly decide on the conclusion of an agreement and set a reasonable limit on factoring operations. In addition, by concluding a factoring agreement with “their” bank, the supplier can sometimes save money. Some banks take relatively small commissions under such agreements, as they are interested in the client and consider factoring as an additional service.

Thus, the supplier gets the opportunity to plan his financial flows, regardless of the payment discipline of the buyers, being confident in the unconditional receipt of funds from the bank against accepted shipping documents for deliveries with deferred payment.

1.2 Types of factoring operations

There are several classifications of dividing factoring into types.

Depending on the volume of risks transferred to the factor:

recourse factoring. The factor acquires from the client the right to all the amounts due from the debtor, however, if it is impossible to recover the amounts in full from the debtor, the client who assigned such a "bad" debt is obliged to reimburse the missing funds to the factor. If a surplus is received from the debtor in comparison with the amount due to the factor, then the surplus is returned to the client.

· non-recourse factoring - the factor acquires from the client the right to all amounts due from the debtor. If it is impossible to recover the amounts in full from the debtor, the financial agent will suffer losses. In fact, this means a complete transfer of ownership of the client's right to claim against the debtor.

Depending on the country of location of the participants in the factoring transaction, factoring is divided into:

internal factoring

international factoring

Factoring is called domestic (domestic factoring) if the parties to the contract of sale are located within the same country. There are usually three parties involved in internal factoring transactions: the Supplier, the Buyer and the Factor.

If the Supplier and the Buyer are residents of different countries, then we are talking about international factoring.

Factoring can be open (with notification of the debtor about the assignment) and closed (without notification). It can also be real (monetary claim exists at the time of signing the contract) and concessional (monetary claim will arise in the future). With the participation of one Factor in the transaction, factoring is called direct, with the presence of two Factors - mutual.

1.3 Types of factoring agreements

Depending on the various requirements of the supplier and the factoring company, a number of options for internal factoring agreements have been developed.

Full service agreement (open factoring without recourse) is usually concluded with constant and sufficiently long contacts between the supplier and the factoring company. Full service includes: complete protection against the appearance of doubtful debts and ensuring a guaranteed inflow of funds; credit management; implementation accounting; credit in the form of advance payment (at the request of the supplier) or payment of the amount of assigned debt claims (minus costs) by a certain date. factoring forfaiting transaction financing

With rare exceptions, full service is provided on the condition that the supplier assigns the debts of all its customers to the factoring company. From the company's point of view, this eliminates the possibility of discrimination, since otherwise the supplier may assign to it only those debt claims that are difficult to collect or for which the credit risk is maximum. Such a system is also beneficial for the supplier - he does not have to keep records and carry out operations on separate, non-assigned debt claims. Thus, this condition is optimal for both parties.

Recourse Full Service Agreement differs from non-recourse one in that the factoring company does not insure the credit risk that the supplier continues to bear. This means that the company has the right to return to the supplier debt claims for any amount not paid by customers within a certain period (usually within 90 days from the due date of payment).

A variation of a full service factoring agreement is, agency agreement or wholesale factoring agreement (ontindoor). An enterprise can establish its own effective system of accounting and credit management, however, it will need protection from credit risks and credit. In this case, the factoring company may offer to conclude an agency factoring agreement, according to which it will acquire unpaid debt claims, and the supplier will act as its agent for collecting them. The inscription on the invoice will notify the participation of the factoring company in the transaction, but instead of an instruction to make a payment in favor of the latter, it will be stipulated that the payment must be made in the name of the supplier acting as its agent, but in favor of the factoring company. The advantage of this arrangement is that it reduces the cost to the factoring company of assessing creditworthiness and therefore the fees charged to the supplier.

The lending under this agreement is similar to lending under a full service agreement. However, the payment of the remaining part is made only after the repayment of debts by customers. Because the factoring company this case does not directly affect the collection process, it cannot guarantee payment by a certain date.

If the supplier is only interested in lending from the factoring company, then an open or confidential agreement on the accounting (discounting) of invoices can be concluded. The conclusion of such an agreement is quite risky for the factoring company, which in this case puts forward the most stringent requirements for the supplier, and takes place only if the latter's financial position is sufficiently strong.

1.4 Benefits for the participants of the factoring agreement

Factoring is beneficial for both the supplier, the buyer and the factor. With it, the supplier can:

increase sales volume, the number of buyers and competitiveness by providing buyers with preferential terms of payment for goods (delay) under a reliable guarantee;

get a loan in the amount of up to 90% of the value of the delivered goods, which will speed up the turnover of funds.

Focus directly on production.

Avoid the risk of non-payment.

The buyer can:

get a commodity credit (the seller delivers the goods with a deferred payment under guarantees up to 3 months on average);

avoid the risk of receiving low-quality goods;

increase the volume of purchases;

improve competitiveness, accelerate the turnover of funds.

Factor acquires:

loan interest;

Commission remuneration.

The ability to attract distributors and manufacturers to serve, thereby attracting new capital.

Thus, we can single out the main economic advantages of factoring as a special form of lending:

increase in liquidity, profitability and profit;

converting receivables into cash;

the opportunity to receive a discount for the immediate payment of all supplier invoices;

independence and freedom from observance of terms of payments by debtors;

the possibility of expanding the volume of turnover;

increase in profitability;

saving own capital;

improved financial planning;

reducing the risk of non-payment.

Factoring is a risky, but highly profitable type of lending, an effective financial marketing tool, one of the forms of integrating banking operations that are most adapted to modern processes of the world economy.

Chapter 2

2.1 Forfaiting, its essence

Forfaiting arose after the Second World War. Several banks in Zurich, which had extensive experience in financing international trade, began to use this technique to finance grain purchases by Western European countries in the United States. In those years, the supply of products and competition between suppliers increased so much that buyers demanded an increase in the terms of credit provided to 180 days against the usual 90. In addition, there was a change in the structure of world trade in favor of high-value goods with a relatively long production time. Thus, the role of credit in the development of international economic exchange increased, and suppliers were forced to look for new methods of financing their transactions. As barriers to international trade fell and many African, Asian, and Latin American countries became more active in world markets, Western European entrepreneurs found it increasingly difficult to provide loans from their own sources, which is why suppliers were forced to use new methods of financing their transactions.

Currently, one of the main forfaiting centers is London, since the export of many European countries has long been financed from the City, which has never hesitated to master new banking technologies. A significant part of the forfaiting business is also concentrated in Germany.

Forfaiting has significant merits that make it an attractive form of medium-term financing. The main advantage of this form is that the forfaiter assumes all the risks associated with the operation. In addition, its attractiveness is growing due to the refusal in some countries of fixed interest rates, the chronic shortage in many developing countries of the currency to pay for imported goods, the growth of political risks and some other circumstances.

Forfaiting is the purchase of negotiable debt from a creditor on a non-recourse basis. This means that the buyer of the debt (forfaiter) assumes the obligation to refuse - forfeiting - from filing a regressive claim against the creditor if it is impossible to obtain satisfaction from the debtor. The purchase of a negotiable obligation occurs, of course, at a discount (Appendix 2).

The forfaiting mechanism is used in two types of transactions:

· in financial transactions - in order to quickly realize long-term financial obligations;

· in export transactions - to facilitate the flow of cash to an exporter who has provided a loan to a foreign buyer.

The main negotiable instruments used as forfaiting instruments are promissory notes. However, other types of securities may become the object of forfaiting. It is important that these papers be "clean" (containing only an abstract obligation).

The main type of forfaiting securities are promissory notes. - translated and simple. Operations with them are usually carried out quickly and simply, without unexpected complications.

In addition to bills of exchange, obligations in the form of a letter of credit may be the object of forfaiting. A letter of credit, as you know, is a settlement or monetary document, which is an instruction from one bank (credit institution) to another to pay for shipping documents for shipped goods at the expense of specially reserved funds or pay a certain amount of money to the bearer of the letter of credit. A documentary letter of credit may be revocable or irrevocable. An irrevocable letter of credit is a firm obligation of the issuing bank to make payments upon the provision of commercial documents stipulated by the letter of credit to it and compliance with all its conditions.

In Russia, letters of credit are used in settlements between non-resident suppliers and buyers, as well as in international settlements. In world trade, documentary letters of credit are used in settlements mainly for foreign trade transactions.

Letters of credit are rarely used as an object of forfeiting. This is due to the complexity of the operation, which primarily consists in the fact that in the case of a letter of credit, it is necessary to agree on the terms of the transaction in advance and in detail, which leads to an increase in the duration of the entire procedure. Meanwhile, the forfaiting market implies a high speed of concluding and completing a transaction, as well as ease of document flow.

2.2 Main directions of forfaiting development

In recent years, the development of forfaiting services in countries with developed market economies has followed the following main directions.

2.2.1 Secondary market and investment in forfaiting assets

By buying assets, the forfaiter makes an investment. Perhaps he does not want to keep his funds in this form for a long time, but on the contrary, he seeks to resell the investment to another person, who also becomes a forfaiter. Based on this subsequent resale of debts, a secondary forfaiting market arises.

The forfaiter can resell part of the assets owned by him, since the nature of the transaction allows the debt to be split into any number of parts, each of which is issued a bill of exchange with its own maturity. One or more of these bills may be sold.

It should not be thought that the primary and secondary forfaiting markets are strongly differentiated. In fact, some forfaiters, operating in the secondary market, remain holders of a certain portfolio of forfaiting securities, while others, little connected with the primary market, may be active traders in the secondary market.

Often there is no direct transfer of forfaiting papers to the new owner. He knows the value of securities, the terms of their circulation, he knows the guarantor, but not the original issuer. In this case, the previous owner, upon expiration of the securities, collects the payments and transfers them to the new owner. What explains such secrecy in the secondary forfaiting market?

First of all, for privacy reasons. The exporter is interested in non-disclosure of information about the ways of financing his transactions and does not want the buyer (or any third parties) to know about his financial needs and the mechanism used to finance his transactions. Any sale of forfaiting papers involves the risk of inadvertently expanding the circle of business relationships, which makes it difficult for the exporter to control. To avoid this, the latter seeks to establish certain restrictions in the contract that would interfere with the free circulation of forfaiting papers. Despite all the difficulties, the secondary forfaiting market is thriving.

So, for the forfaiter, the secondary market has the following attractive features:

- income on forfaiting securities is usually higher than that which can be received on other securities (with the same level of risk, the same terms and currency);

- any investor is interested in reducing risks, and guarantees on forfaiting papers or avals of first-class banks are the best security for payment.

Despite the attractiveness of investments in forfaiting securities, the volume of such transactions and the number of forfaiters are still small. The forfaiting market has not yet developed to the size of a brokerage market. Many forfaiters, especially those trading in the primary market, believe that such a development could frighten many exporters and their banks, as it will lead to a loss of control over the securities placed on the market.

2.2.2 Syndication

In the Russian market of factoring services, the concept of "syndicated factoring" is quite new. Syndicated factoring is an alliance between a factoring company and a bank with the aim of joint development of the factoring market.

Consider the general scheme of interaction between a bank and a factoring company. The bank provides:

- financial resources for organizing the initial sales of joint products to the bank's customers;

- targeted lending to provide factoring financing to the bank's customers.

The company provides additional services - maintaining sales and providing all the necessary infrastructure for doing business:

- operational back office;

- risk management system;

- collection and management of receivables.

The partner bank introduces factoring products to its clients, carries out pre-sales, etc.

Further, a factoring company joins the negotiations, bearing the client's credit risks within the framework of this project, as a result of which the client passes the approval procedure.

The next stage is the signing of a tripartite factoring agreement with the client. In accordance with it, the bank funds factoring operations and provides support in document management, and the factoring company finances clients with the bank's funds and provides a full range of factoring services.

The division of the received income from operations with the client is carried out in accordance with the terms of the agreement concluded between the factoring company and the bank.

The functions of the bank and the factoring company are shown in the table.

The benefits are clear to all stakeholders:

- the bank is expanding its product line, avoiding the cost of creating a factoring division;

- the factoring company gets access to funding and the opportunity to increase business volumes by using the resources of the bank and its branch network;

- the client can widely use commodity lending to its customers and, being freed from receivables, gets the opportunity for additional lending.

Unlike a conventional loan, the financing limit does not depend on the financial condition of the company, it is calculated on the debtor. At the same time, neither the client nor the debtor needs to provide collateral, which means that all collateral assets are free, and you can take loans for other purposes from banks.

The factor also controls the receipt of payment from the client's debtors and reminds the buyer of the need to make payment within a predetermined period.

The final cost of syndicated factoring services by the bank is determined by the number of debtors, the grace period, debt diversification and turnover for the last month.

The main consumers of factoring are small and medium-sized businesses engaged in the production, supply and wholesale of consumer goods. In the face of fierce competition, they are forced to agree to deferred payments.

The total volume of commodity loans is growing. But so far, not every supplier evaluates the lost profit that his company could receive by returning funds to circulation and eliminating cash gaps using factoring.

The partnership between a bank and a factoring company has long been a normal practice all over the world. The appearance of syndicated factoring in Russia indicates the development of the factoring market, bringing it to the international level and making it more qualitative.

2.2.3 Floating rate financing

An important direction in the development of the forfaiting market is the expansion of financing, which involves the calculation of a discount based on a floating interest rate. This practice is due to increased interest rate volatility and reflects the reluctance of many banks to enter into transactions at fixed rates.

From the exporter's point of view, any sale based on a floating rate of interest worsens the possibility of obtaining a maximum of cash. This is because the primary forfaiter sells securities in the secondary market at a discount based on the prevailing interest rate, and the sale is subject to a final financial settlement on a certain date and subject to subsequent movements in interest rates. In fact, there may be several such dates before the expiration of the bill. Thus, the agreement involves a high degree of risk and can lead to unpredictable obligations, which, of course, is a cause for concern not only for the forfaiter, but also for its auditors.

2.3 Size of the forfaiting market

Any estimate of the size of the global forfaiting market is nothing more than a guess. This market has grown significantly in recent years, but still remains a small part of the market for medium-term financial resources. The reasons that led to its emergence and growth will continue to operate in the foreseeable future, however, there are certain restrictions on access to it for new forfaiters. These restrictions are as follows.

1. Since we are talking about medium-term (in the Western sense) financing, it is often difficult for banks to reconcile the repayment dates of forfeited assets with the repayment dates of their own loans. Thus, there remains a rather high risk in case of changes in interest rates, which significantly hinders the activity of participants in this market.

2. When carrying out forfaiting operations, special equipment is used that requires highly qualified service. There are very few specialists in this field, and their training takes a long time.

3. Banks do little research and development of the forfaiting market.

2.4 Stages of preparing a deal

A) INITIATING A TRANSACTION

There are two possible initiators of a forfaiting transaction - an exporter and an importer. Most often, this role is played by the exporter or his bank. And this is natural, since either bills of exchange issued by the exporter or promissory notes paid to him are presented for discounting. This is what determines the need for negotiations between the initiator and the forfaiter at the early stages of contract preparation. Even before the exporter and importer sign a contract, the forfaiter can determine his requirements for a guarantee or aval, at least indicate the size of the discount. Without this information, the exporter is unable to accurately determine the price of the contract.

In practice, not every exporter enters into negotiations with a forfaiter at such an early stage, and as a result, he may find that the financing margin included in the contract price is unreasonable.

B) DETERMINING THE NATURE OF THE TRANSACTION

The first thing the forfaiter must determine for himself is the nature of the transaction, i.e. find out what securities he will have to deal with - financial or commodity . Financial bills are securities issued for the purpose of accumulating funds, which the borrower can later use at his own discretion. Commodity same bills of exchange are drawn up in case of transactions of purchase and sale of products. However, the boundary between financial and commodity transactions is somewhat blurred (say, a bill is issued without a trade transaction, but then the funds received are used to purchase some goods).

Most of the bills sold on the secondary forfaiting market are tradable. Therefore, in the case of offering financial securities, a prior written warning about this is considered mandatory. If this condition is violated, the buyer of financial securities has the right to demand the annulment of the transaction.

The forfaiter should always have on hand a brief description of the underlying transaction. It can be received by telex or fax with a preliminary discussion of the terms of the operation.

C) OTHER INFORMATION NECESSARY FOR THE FORFATER

After the forfaiter finds out the nature of the transaction, he must determine the following.

1. Amount of financing, currency, term.

2. Who is the exporter and what country is he located in? This issue is important because although funding is provided non-recourse, there are circumstances in which the forfaiter can make claims against the exporter. The creditworthiness of the exporter also matters. In addition, the forfaiter must verify the authenticity of signatures on promissory notes,

3. Who is the importer and what country is he from? In order to verify the authenticity of signatures and the compliance of bills of exchange with the law, the forfaiter must accurately determine the importer and his location.

4. Who is the guarantor and what country is he from?

5. How is the debt subject to forfeiting formalized: a promissory note, a transfer, etc.?

6. How is the debt insured?

7. Periods of repayment of bills, repayment amounts.

8. Type of exported goods. This question interests the forfaiter, firstly, from the point of view of the expediency of the entire transaction, and secondly, from the standpoint of the legality of exports.

9. When will the goods be delivered? The date must be close to the date of the funding. It is also important that the guarantor is unlikely to be able to avalize the bill until the delivery is made.

10. When will the documents to be discounted arrive? Until the documents are received, the forfaiter will not be able to check and discount them.

11. What licenses and other documents under the terms of the contract must be submitted for the supply of goods? The forfaiter is responsible for ensuring that there are no delays in the performance of the contract he finances.

12. To which country will the forfaiter be paid? This is important to know, since a payment to a foreign bank may delay the receipt of funds, and such a delay should be taken into account when discounting securities, there is also the possibility of freezing funds in accounts by the authorities of the country, and this possibility should also be taken into account when calculating the discount. The forfaiter can even refuse the transaction if he is not satisfied with the bank 6 in which the funds will be received.

D) CREDIT ANALYSIS

After the forfaiter receives the answers to the above questions, he must conduct a credit analysis. Most forfaiting transactions are carried out by banks, and credit analysis is an obligatory step in preparing a transaction. There are at least four types of risk that must be analyzed by the forfaiter. : guarantor risk, buyer risk, importer risk, country risk.

In addition, the forfaiter must collect the following information .

1. What is the creditworthiness of the guarantor?

2. Will it be possible to sell securities at an acceptable price in the future?

3. Are there any doubts about the creditworthiness, competence of the exporter or importer and what are they based on?

4. Is it possible to purchase this debt, taking into account the securities already in the forfaiter's portfolio? What is the expected degree of risk?

After that, the forfaiter can name his fixed price. However, from the moment the application for a forfaiting transaction is submitted to the actual delivery of goods, when the forfaiter can buy bills, a certain time passes, during which interest rates can change in an unfavorable direction for the forfaiter. This risk period can be divided into two parts.

E) DOCUMENTATION OF THE TRANSACTION

After a preliminary agreement on the transaction has been reached, the forfaiter sends documents with an offer (telex or letter) to the exporter, who must confirm his consent in writing. Forfaiter also lists the documents that he needs to familiarize himself with before he starts discounting promissory notes (license to export goods, other notification documents). Familiarity with the specified documentation should give him the opportunity to make sure that the transaction will be completed.

When the offer is accepted by the exporter, he must prepare a series of bills of exchange or sign an agreement to accept promissory notes from the buyer. At this stage, the exporter must also obtain a guarantee or aval for his bills. In addition, he makes an inscription on the bills: "without the right of recourse." Thus, all documents will be ready, on the basis of which the forfaiter can discount, even if the shipment of goods has not actually been made yet.

E) PERFORMANCE OF THE CONTRACT AND SHIPPING OF THE GOODS

2.5 Advantages and disadvantages of forfaiting financing

Forfaiting is a fairly flexible instrument of international finance. However, it has several limitations:

1. the exporter must agree to extend the term of the loan for a period of 6 months to 10 years or more;

2. the exporter must be willing to accept debt repayment in installments;

3. If the importer is not a government agent or an international company, the repayment of the debt must be unconditionally and irrevocably guaranteed by a bank or government institution acceptable to the forfaiter.

In general, this tool has both advantages and disadvantages for everyone who uses it.

Benefits for the exporter

1) Provision of forfaiting services on a fixed rate basis.

2) Non-recourse forfaiter financing to the exporter.

3) The possibility of obtaining cash immediately after the delivery of products or the provision of services, which has a beneficial effect on overall liquidity, reduces the volume of bank loans, and makes it possible to reinvest funds.

4) Lack of time and money spent on debt management or arrangements for its repayment.

5) Absence of risks (all currency risks, risks of changes in interest rates, as well as the risk of bankruptcy of the guarantor are borne by the forfaiter).

6) Ease of documentation and the ability to quickly issue promissory note debt instruments.

7) Confidential nature of these transactions.

8) The ability to quickly make sure that the forfaiter is ready to finance the transaction, promptly agree on the terms of the transaction.

9) Possibility to receive in advance from the forfaiter an option to finance the transaction at a fixed rate, which allows the exporter to pre-calculate their costs and include them in the contract price, and calculate other final figures.

Disadvantages for the exporter

1) The need to prepare documents in such a way that there is no recourse on the exporter himself in the event of the bankruptcy of the guarantor, as well as the need to know the legislation of the importer's country, which determines the form of bills of exchange, guarantees and aval.

2) The possibility of difficulties if the importer offers a guarantor that does not suit the forfaiter.

3) Higher forfaiter margin than conventional commercial lending.

Benefits for the importer

1)

2) The possibility of obtaining an extended loan at a fixed interest rate.

3) Possibility to use a credit line in a bank.

Disadvantages for the importer

1) Reducing the possibility of obtaining a bank loan when using a bank guarantee.

2) The need to pay a commission for the guarantee.

3) Higher forfaiter margin.

4) The possibility of difficulties with the payment of a bill as an abstract obligation in the event of delivery of substandard goods or non-fulfillment by the exporter of any other terms of the contract.

Benefits for the forfaiter

1) Simplicity and speed of paperwork.

2) The ability to easily sell the purchased assets in the secondary market.

3) Higher margin than with lending operations.

Disadvantages for a forfaiter

1) No right of recourse in case of non-payment of the debt.

2) The need to know the bill of exchange legislation of the importing country.

3) Responsibility for checking the creditworthiness of the guarantor.

4) The need to bear all interest risks until the expiration of the bills.

5) Inability to make a payment ahead of time.

The disadvantages indicated in paragraphs 2 and 3 are typical not only for the forfaiter. Here they are singled out for the reason that no additional debt agreements are drawn up for the forfaiter, to which he could refer. It should also be remembered that the forfaiter carries political and other risks (transfer risks, currency fluctuation risks). They are not marked as disadvantages for the forfaiter, as they are inherent in any form of international credit.

Benefits for the guarantor

1) Ease of transaction.

2) Getting a commission for your services.

Disadvantage for the guarantor

It is one, but very important, and lies in the fact that the guarantor assumes the absolute obligation to pay the bill of exchange guaranteed by him.

Conclusion

When coordinating export deliveries, the most common source of problems is the lack of financial resources from the buyer. This is especially true for exports to developing and unstable countries. It is for this reason that a variety of medium- and long-term trade finance mechanisms are in such strong demand. Factoring has been increasingly used in Russia lately. But forfaiting services are provided on an extremely limited scale only to beloved customers. In vain: it was forfeiting that could support our weak non-commodity exports.

Forfaiting as a method of relatively long-term financing is of interest to large non-commodity exporters. Forfaiting solves the problem of insufficiency of the buyer's free funds when the seller is unable to provide a deferment or installment payment at his own expense for the time required by the buyer. As a rule, the amounts of forfaiting contracts do not fall below 100 thousand US dollars, while amounts of hundreds of millions of dollars are not something exotic.

Forfaiting is especially interesting for exporters entering risky markets in developing countries. It is these options that may be available to Russian manufacturers first of all: the international competitiveness of Russian products leaves much to be desired, but “third” countries may represent an adequate market for not too advanced Russian products. However, in these markets, foreign companies are actively competing with us - often successfully precisely because they can offer convenient conditions for long-term lending to buyers. And often - with the help of forfeiting.

It is interesting that in the days of the USSR, foreign trade contracts were carried out using the forfaiting scheme very often. The main (if not the only) player in this market was the Vneshtorgbank of the USSR, but what a! He quite effectively provided Russian enterprises (which were completely unaware of the scheme) with a cash flow, and he himself even participated in operations on the secondary forfaiting market.

In Russia, forfaiting is developing quite slowly. At the same time, many banks, in principle, mentioning it in a number of their services, instead of answering the question “what are the conditions”, declare that they are not engaged in forfaiting.

An obvious barrier to the development of forfaiting in Russia is the specific geography of Russian imports. As a rule, country and other risks are high in Russia, and it is very difficult for Western companies to find a worthy guarantor/availist for a buyer's bill in a country with an unstable economy.

Secondly, the forfaiting scheme is still much more difficult to organize than, for example, factoring. Practice shows that if an enterprise has the opportunity (with relatively short transactions) to use both factoring and forfaiting, then the choice is always made in favor of factoring.

Another forfaiting restriction is Russian legislation. Therefore, Russian banks can only act as an agent, but not actually a forfaitor. It is also extremely slow to accept global business practices, seeing each new tool as a way to deceive the fiscal system. If taken literally, an advance payment is considered the only possible form for an indisputable subsequent refund of VAT to the exporter. But, since 100% advances are not paid anywhere, our tax authorities gradually got used to the fact that a letter of credit is a normal form of payment for export contracts, and not at all a way to circumvent the law. And all the same, contrary to all world forfeiting practice, 100% of the contract amount, including the discount, is credited to the account of the Russian exporter, and only then the discount amount is transferred to the forfeiter. The normalization of tax legislation could significantly increase the opportunities for forfaitors and their clients.

This year, for many suppliers, factoring has become the only way to close cash gaps, avoid unnecessary losses, and at the same time retain valuable counterparties. Since the end of April, thanks to the efforts of legislators, this financial instrument has acquired additional tax benefits, which it would be a sin not to use.

Factoring is often compared to a bank loan. From the point of view of the company, factoring and credit pursue the same goal - to replenish working capital, but factoring has a number of significant advantages:

- the company does not need to provide the bank with collateral and draw up a lot of paperwork, it is only necessary to notify the buyers about the change in the details for paying for supplies;

- no need to withdraw funds from circulation to repay the loan;

- factoring services are systematic, while re-acquisition of a loan may be denied;

- the amount of financing for factoring is not limited: the larger the volume of sales of the client company, the higher the amount of financing; the issuance of a loan is limited to a certain period and amount.

Factoring is an alternative to expensive and sometimes inaccessible overdraft loans and at the same time an effective tool for managing working capital in trade and procurement activities with deferred payment.

Thus, knowing the obvious advantages of both factoring and forfaiting, we can confidently speak about the further development of these financial instruments.

Bibliography

1. Civil Code of the Russian Federation (parts 1 and 2);

2. Federal Law No. 173-FZ of December 10, 2003 (as amended on July 22, 2008) “On Currency Regulation and Currency Control”;

3. Federal Law No. 395-1 of December 2, 1990 (as amended on April 28, 2009) “On Banks and Banking Activities”;

4. Ed. Korobovoy G.G. Banking - M.: Economist, 2005;

5. Ed. Lavrushina O.I. Banking - M.: Finance and statistics, 2005;

6. Akimova V.V. Syndicated factoring - Russian realities. "Factoring and Trade Finance". II quarter 2009 No. 2;

7. Vasilenkov S. Factoring: who and where is at risk. "Risk Management", September-October 2008, No. 9-10;

8. Lobanova N.I. Short-term trade finance: factoring and forfaiting "International Banking Operations", July-August 2006 No. 4.

9. Maksimova L.F. Factoring as a method of replenishing the working capital of an enterprise Bulletin of the Federal Arbitration Court of the West Siberian District, March-April 2008, No. 2;

10. Pokamestov I.E., Lednev M.V. Organization of factoring business: from decision making to building a sales strategy. "Organization of sales of banking products". - 2007, No. 1;

11. Pokamestov I.E. Factoring market of foreign countries. "Bank lending". - 2007, No. 2;

12. http://www.factoringpro.ru/;

13. http://www.masterleasing.ru/forfejting.htm;

14. http://www.regulation.net/bank/mbo/2009_3_article.htm.

Attachment 1

Factoring scheme

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one . Delivery of goods. The client delivers the goods to the buyer on a deferred payment basis.

2. Assignment of the right to claim a debt. The client cedes to the bank the right to claim the delivery debt.

3. Advance payment. Immediately after the submission of shipping documents, the bank pays an advance payment to the client (up to 90% of the amount of the delivered goods).

4. Payment for the goods by the buyer. The debtor makes payment for the delivered goods to the bank.

5. Final payment for the delivery. After receiving payment from the debtor, the bank pays the client the balance of funds (minus the commission and advance payment).

Appendix 2

Forfaiting scheme

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1. Contract;

2. Issue of a promissory note;

3. Shipment of goods;

4. Provision of documents for the shipment of goods;

5. Signing of a forfaiting agreement, aval;

6. Verification of documents, payment minus discount;

7. Transfer of funds;

8. Presentation of a bill for redemption;

9. Transfer of funds under the bill.

Appendix 3

Comparative characteristics of factoring and forfaiting

FACTORING	FORFEITING
1. The object of the transaction is primarily an invoice.	1. The object of the transaction is primarily a bill of exchange (simple or transferable).
2. Short-term lending (up to 180 days).	2. Medium-term lending (from 180 days to 10 years).
3. The amount of the loan is limited by the capabilities of the factor.	3. The loan amount can be quite high due to the possibility of syndication.
4. The factor advances the creditor's working capital of 70-90% of the debt. The remaining 10-30% are credited to the creditor's account only after the debt is repaid by the buyer of the product, minus commission and interest.	4. The forfaiter pays the debt in full minus the discount.
5. The factor either reserves the right of recourse to the creditor or waives this right, but in this case, when exporting goods, the political and currency risks are borne by the exporter.	5. Forfaiter bears all risks of non-payment of debt including political and currency risks when exporting goods.
6. The operation may be supplemented with elements of accounting, information, advertising, marketing, legal, insurance and other services for the creditor (client).	6. Does not involve any additional maintenance.
7. The possibility of reselling the factoring asset by the factor is not provided.	7. The forfaiter can resell the forfaiting asset on the secondary market.
8. No guarantee from a third party is required.	8. Third party warranty or aval required.
9. Assumes lending against an already existing monetary claim, or against a claim that will arise in the future, but clearly indicated in the financing agreement against the assignment of a monetary claim.