FAQ

Factoring is a financing technique allowing a company to receive payment of invoices before their due date. The company transfers ownership of its invoices to a factoring company (called the "factor"), which makes immediate payment. When invoices fall due, the factor then receives payment from the client accordingly.

Factoring is available to companies solely as a B2B service, meaning companies who issue invoices for services to other companies or public bodies.

Factoring is referred to as “off-balance-sheet”, where the risk of default in invoice payment is assigned in full and irrevocably transferred to the factor. From the moment this risk is assigned to the factor, the financing received by the company can be considered as an irrevocable payment. Accounts receivable are then settled. The company has improved its cashflow without taking on any debt.

A factoring agreement is referred to as “recourse” when it makes provision for the factor to return unpaid invoices to the assigning company.
This is called “recourse” by the factor against the assigning entity when the company is asked to buy back the invoices previously assigned.

A factoring agreement is considered “without recourse” when there is no possible return of an assigned invoice. A factoring agreement “without recourse” enables invoices to be assigned in an “irrevocable” manner.

A syndicated factoring agreement is one which assigns the same accounts receivable to several factors.
The company assigns its accounts receivable to a factor, referred to as a syndicating “agent”, who in turn assigns a portion of the receivables to one or more factors, known as “participants”. This technique allows the risk to be shared by several factors.

A factor, or a factoring service provider, is a financial establishment specialising in factoring. Most factors are subsidiaries of banks.

Major banking groups all have a factoring subsidiary or division.

In France there are around 20 factors, including ABN AMRO, Banque Delubac & Cie, BNP Paribas Factor, Bibby Factor France, BPCE Factor, Crédit Mutuel Factoring, Edebex, Eurofactor, FactoFrance, La Banque Postale Leasing & Factoring, Société Générale Factoring, an others.

Other major players in the rest of Europe: Santander, Caixa, BBVA, Banco Intesa, UniCredit, Deutsche Factoring, Commerzbank, CofaceFinanz, Danske Bank, ABS Factoring, HSBC, Süd Factoring, etc.

Credit insurance is a solution designed for companies to secure their accounts receivable and protect themselves against non-payment. It offers guarantees on trade receivables against the risk of payment default by its customers. Credit insurance covers commercial risk and political risk. Other risks, such as manufacturing risk, can also be covered.

Credit insurance is aimed exclusively at B2B companies, i.e. companies that invoice other companies or public bodies for their services. It is intended for companies of all sizes (SOHOs, SMEs and large accounts).

The standard contract (to the first euro): for this contract, the entire insurable turnover is taken into account. It covers domestic and export turnover and insures the risk of declared or presumed insolvency.

The excess-of-loss policy: This policy guarantees compensation for losses above a deductible defined in the contract. The aim is to cover so-called "exceptional" losses. The insured agrees to bear a certain amount of unpaid claims and the insurer intervenes once the annual deductible has been exceeded and up to the disbursement limit stipulated in the contract.

Many credit insurers are present on the European market, including AIG, Allianz Trade (formerly Euler Hermes), Atradius, Axa, Cartan Trade, Cesce, Coface, Chubb, Credendo, Groupama, etc.