Laurent De Coster Head of Sales Management Factoring, more than just a financing solution

Transcription

1 ING Commercial Finance BeLux Laurent De Coster Head of Sales Management Factoring, more than just a financing solution

2 Contents Inhoud Introduction Factoring market evolution Factoring in Europe Products Receivables Finance: Scope Basic structure Advantages When does it make sense? The future of factoring?

3 Introduction 1. Funding climate Capital and bank markets are currently volatile in light of the sovereign debt crisis. The situation is not yet stabilised. Basel-III will further impact lending costs and reduce general leverage appetite as European banks might be forced to reduce their balance sheet. Considering this restrictive funding climate, it may prove beneficial for both banks as for the client to attract long term funding from alternative sources, eg. backed by the company s assets. Working Capital is HOT Factoring as an alternative and flexible funding source Diversification of funding sources to reduce dependency on more traditional funding instruments. Efficient source of funding (Cherry picking / portfolio approach). Continuous source of funding (follows the clients working capital needs). Off-balance sheet treatment may be achieved. 3

4 Factoring market evolution From obligation, to solution! Factoring 10 years ago : obligation for companies in restructuring Factoring myth s: Factoring is bad news; factoring is too expensive Factoring today: MORE THAN JUST A FINANCING SOLUTION!! The factoring market has been expanding with about 15% a year. In 2011 The market grew with 14,5% to 36,9 bln of assigned sales and EUR 3 bln of outstanding investment (average finance ratio of 57%) ING Commercial Finance BeLux has about 12 % market share compared to 4% in 2007.

5 Factoring in Europe Factoring represents +/ 10% of GDP in most European countries and still growing! BE FR DE GR IT SP GDP 2010 (in millions ) 329,520 1,825,310 2,361, ,860 1,454,780 1,007,104 Number of companies Total Industry Turnover 2010 (in millions ) Total advances (in millions ) 32, , ,277 14, , ,909 4,025 14,556 10,643 1,843 39,259 14,113 Total number of clients 5,367 35,217 12,000 2,560 24,952 19,599 * Gross domestic product

6 Products of ING Commercial Finance Product Overview Receivables Finance Immediate disposal/financing of 70%-90% of assigned receivables (with or without recourse on client) Selection of debtors possible (concentration up to 30% on country basis) Full cash dominion by ING Commercial Finance Credit Management Services Credit management Debtor administration Debt collection Credit Insurance Take over Debtor Risk Up to 100% coverage

7 Receivables Finance: Scope Principle: all in invoices are in scope if delivery/performing of product/service is eligible and final Don ts: - project-financing - BtoC - registered contractors - Pre-invoicing - intercompany - (high concentration)

8 Receivables 3. Receivables Finance: Finance: Basic Basic structure Structure Portfolio of trade receivables Notification conditional Collections Obligor 1 Obligor 2 Obligor 3 Products Receivables Originator Seller Advance payment Transfer receivables Purchaser Servicer Obligor 4 Obligor Obligor N Receivables purchase / pledge agreement servicing agreement Credit Insurance Policy Credit Insurer Optional & deal specific depending on: Recourse non recourse Via portfolio policy of ComFin or Client specific policy

9 Advantages Receivables Financing No Finance limit: financing follows growth of the company Financing is based mainly on quality of portfolio Direct access to cash stuck in receivables Secured financing Improved financial ratios thanks to enhanced working capital efficiency lower pricing grid thanks to ratios enhancement Mitigation of risk on debtors (Off-balance structure)

10 Receivables Financing: When? Growth: Strong need of liquidity to finance growth Undercapitalised companies Cash-burning No fixed assets Event financing: Acquisition structure Balance optimisation Liquidity management Restructuring: Continued financing in case of legal restructuring

11 The future of factoring? The sky has no limit? Looking at the evolution of the financial markets, Bazel III, European constraints, the factoring market is deemed to continue it s expansion BUT will have to adapt to existing demands and needs. Future developments? - Corporate factoring: expand International activities - Reverse Factoring - Syndicated factoring - Borrowing Base factoring -

12 Thanks for your attention! M ING Commercial Finance