INTERNATIONAL FACTORING

Transcription

1 INTERNATIONAL FACTORING November 3,

2 L. Gabriel Segura President and founding officer of CVCredit Inc, a Miami-based company which focuses in USA-domestic and international factoring services. Nine years experience in international factoring services, plus nine years experience in international banking including: trade financing, commercial lending and correspondent banking. MBA - Florida International University. Bachelors Degree in Industrial Engineering - Universidad de los Andes. CVCredit Inc: Factoring in US Dollars of: USA-domestic accounts International accounts Incorporated in 2003, CVCredit is the affiliate financial company of Credivalores for the United States. Credivalores 50-year-old holding company has participation in other industrial sectors such as: sugar mills, brokerage firms, gas stations, energy power plants and financial services. Who we are 2

3 AGENDA What is factoring - general characteristics Statistics - tendencies Export Factoring Conclusions and Recommendations Agenda What is Factoring: Discount or sale of your accounts receivables. Account receivables financing. 1. Delivers product and issues invoice 4. 80% advance 2. Endorses Invoice 3. Accepts product and endorsement 5. Payment 6. 20% balance payment What is Factoring Characteristics 3

4 Benefits: Use Factor s expertise in evaluating your client s risk Improve your cash flow Very fast way to obtain immediate liquidity Increase your sales Offer attractive credit terms to your clients Take advantage of discounts due to prompt payment to suppliers Rely on the Factor s bilingual collection staff Don t wait days to get paid by your client What is Factoring Characteristics Difference between a Factor and a Bank in the United States A bank s main focus is the client (seller) while a Factor s is the buyer, therefore factors are more open to finance clients (sellers) that are not bankable, but rely on the quality of the debtor more. Banks are less expensive, because they capture deposits Factors are not regulated (faster, more flexible) Factoring with recourse (60%) vs. Factoring without recourse (40%) Factoring vs. Credit Insurance Companies Factoring vs. Purchase Order Financing What is Factoring Characteristics 4

5 (in Millions of US$) Europe 1,396,421 Americas 247,674 Africa 22,296 Asia 475,155 Australia 60,817 Total 2,202,364 Why Europe is more active? - Standard factoring laws - Reliable financial information from buyers - Law enforceability - Bank s penetration, lower cost - Cultural acceptance by sellers and buyers Source: Factor Chain International Oct. 27, 2011 Statistics Total Factoring Volume by Country in the last 7 years (in Millions of US$) years change Americas Argentina Bolivia 24 Brazil 20,936 65, % Canada 4,264 4,975 Chile 5,673 21, % Colombia 1,756 3,720 Honduras 214 Mexico 6,213 19, % Panama Peru 3,624 United States 110, ,939 15% Other - France 110, ,775 86% Germany 60, ,086 Italy 163, ,072 Spain 61, ,869 United Kingdom 249, ,306 China 5, , % India 2,195 3,675 Japan 97, ,616 Taiwan 31,066 89,525 Other 229, ,256 TOTAL WORLD 1,161,046 2,202,364 90% Source: Factor Chain International Oct. 27, 2011 Converted to USDollars by LGS Statistics 5

6 COFACE Country Risk Assessment comparison table Canada A1 Dominican Republic B Chile A2 El Salvador B United States A2 Guatemala B Brazil A3 Argentina C Trinidad and Tobago A3 Bolivia C Colombia A4 Ecuador C Costa Rica A4 Honduras C Mexico A4 Jamaica C Panama A4 Paraguay C Peru A4 Venezuela C Uruguay A4 Cuba D Guyana D Haiti D Nicaragua D Source: (1) Coface web site: October 27, 2011 Statistics Main Risks for Export Factoring: Exporter (seller): Expertise, track record, character. Financial statements UCC1, liens, judgments Product Country Risk: Political risk (Venezuela, Cuba, Haiti) Economic risk (foreign exchange control) Legal risk (enforcement of factoring legal documentation). Not standard rules and procedures Notification letter Waiver against disputes Language (Brazil, Province of Quebec) Buyers risk: Financial statements (unreliable financials limits ability to insure) Commitment to honor factoring assignment Payment to Factor vs. Payment to the Exporter Disputes, Credit Memos Fraud Product / Industry Risk: Construction, produce, textiles, hotels, chain stores. Export Factoring 6

7 How to Obtain Export Factoring: Sometimes it is hard to assess the risk of the transaction in different countries. Therefore, factors need a stronger source of repayment from the Exporter, specially to mitigate the risks of fraud and disputes. Exporter needs to have enough equity to support a loss. Exporter needs to have experience, good track record. It is recommended for the exporter to have their own credit insurance policy. Focus on stronger buyers and a diversified portfolio. Request lower percentage of advance of about 70%, versus the USA Domestic standard of 80%. Export Factoring CONCLUSIONS: Good option to obtain immediate cash, specially when you sale to strong buyers. Use factoring as a tool to reach more buyers that typically require credit terms. Alternative for sellers that can t obtain enough funding from banks or do not qualify for a traditional loan. Do not use factoring to finance long term investments. Sale to stronger buyers. If the buyer doesn t pay, everybody losses, even with credit insurance (do not rely on your credit insurance policy or the factor to sell to anyone and everyone) CONCLUSIONS 7

8 CONTACT INFORMATION L. Gabriel Segura Tel: Brickell Ave. Suite 703 North Tower Miami, Florida Contact Information 8