Business Loans

Factoring is a combination of services which includes providing financing to a client, i.e. purchase of trade debts payable to the client where the client transfers to the bank monetary claims against invoices issued by the client to its customers for goods sold or services rendered.

For the seller:

• a possibility to obtain funds without pledge or mortgage;
• improving the company's liquidity ratios;
• more discipline in settlement of accounts with buyers;
• easier planning of cash flows;
• decrease of debt administration expenses;
• a possibility to grant buyers longer terms of settlement and to increase trade volumes.

For the buyer:

• more extended payment terms;
• more purchasing power without an additional source of funding;
• attraction of new suppliers.

Factoring period:

• in case of a factoring limit (which is divided among separate buyers) - up to 1 year;
• in case of separate financing (postponed payment) - up to 120 days (in separate cases, a longer term is possible).

Means to secure performance:

• acceptable financial condition of the buyer;
• right of reverse claim against the seller;
• trade credit insurance taken out from insurance companies, specifying the bank as the beneficiary;
• other guarantees given to the bank.

Documents to be provided to the Danske Bankas in order to make use of factoring:

• Application for a credit product;
• Filled-in form with information about debtors;
• Copies of contracts with buyers.

Procedures

1. The seller signs a factoring agreement with the Danske Bankas.
2. The seller sells goods or renders services to the buyer.
3. A copy of a VAT invoice is filed with the Danske Bankas.
4. The bank makes an advance payment to the seller against VAT invoices acceptable to the bank (up to 90 % of the invoice amount).
5. The bank receives from buyers the whole (100 %) of the invoiced amount in such VAT invoices.
6. The bank, having deducted interest, transfers the factoring balance to the seller.