Factoring

Factoring is a complex of services when a Bank finances the delivery of goods or services made under the deferred payment terms.

In factoring operations the Supplier (Client) assigns to the Factor (Bank) the rights of demand arising out of contracts made with its Buyers (Debtors);

Currently the MDM Bank provides factoring services to the Russia resident customers in relation to deliveries to Russia resident buyers.

The Factor offers a range of services, subject to a type of factoring:

• Record-keeping of the claims being assigned;
• Financing the supplier;
• Collecting payments from the Debtors;
• Protection of the Client against the Debtors’ insolvency.

Thus factoring should be regarded as a complex of services (“factoring service”) rather than as a deal, bearing in mind a wide range of services which the Bank provides to its Clients in the framework of this offer.

WHY TO USE FACTORING

In the current market situation, as the competition tightens, the sellers of goods and services strive to offer more favorable terms to their buyers and sometimes are even forced to accept unfavorable terms imposed by the latter. In order to secure the relationship the sellers often agree to deferred payment terms, which for them leads to the shortage of turn-over capital and a number of other problems. At the same time, the ability and readiness to grant a deferral may enable the seller to secure significant competitive advantage and as a result lead to expanding the business. As a result the seller is effectively forced to finance the buyer’s business, becoming dependant on the buyer’s paying capacity and payment discipline as well as on the market conjuncture.

Factoring allows the Seller to replenish the turn-over capital immediately after the delivery of goods even if it was made with a deferral and thus to minimize the risks.

With the use of factoring the Seller can receive up to 90% of the amount of the goods delivered immediately after their shipment. The Bank pays this money and subsequently receives it from the Buyer.

There is no need of re-signing the agreements with the Buyers. They will be simply notified of the change of settlement details due to the assignment of the right of demand to the bank.

Factoring Service Chart:

1. Delivery of the goods with deferred payment
2. Assignment of the right of demand to the Bank
3. Payment of finance immediately after the delivery (up to 90% of the value of the goods)
4. Payment for the goods delivered
5. Payment of the remaining amount (from 10%, after the payment has been made by the Buyer), less commission

Tariffs

We offer a flexible tariff system to our clients.
Our officers will provide you with more detailed information.
E-mail: Sergey.Shvez@mdmbank.com.
We are always happy to answer your questions or to provide additional information on our services.