STEP 1: Initial interview and evaluation of the possibility of signing a factoring agreement.
order to initially assess the risk associated with signing a contract with a
potential invoice owner and to establish a list of necessary documents to
submit a factoring application, the factor will be interested in obtaining
information on the legal and economic situation of both the invoice owner and
the business conducted by its contractors-debtors, and the risk, which is
associated with the acquisition of individual claims.STEP 2: Application for the factoring agreement.
Presentation of the necessary documentation on the business run by the invoice owner, contractors-debtors, receivables sold and submission of an application, which will specify: the period for which the contract is to be concluded and what will be the subject of it (i.e. data on the invoice owner, goods / services or planned the number of invoices). This will allow the factor to assess the risk of debt purchase, debt servicing costs and potential profits.
DOCUMENTATION REQUIRED FOR FACTORING AGREEMENT.
1. Concerning your business.
- legal documentation,
- founding documents (notarial deed of the company or business register, certificate of assigning the REGON number and the current excerpt from the commercial register), extract from land and mortgage registers, title deeds, lease agreements, powers of attorney, information about the concession (if you run a company that requires it), etc.
- economic and financial documentation,
- information from the bank about the company accounts held, the amount of turnover and average balance of accounts, loans taken and timely repayments, as well as the general condition of the company,
- financial statements, i.e. balance sheet and profit statement for the last year or the last three years, information from the Social Insurance Institution on payment arrears, information from the Tax Office on non-arrears with taxes,
- information about the shares held or sureties granted,
- information on the conducted business, i.e. the sales market, supply market, offered products / services, distribution, competition, pricing policy,
- information on the recipients of goods / services, i.e. the number of recipients, the course of cooperation so far, the amount of receivables, the value and number of planned receivables.
2. Concerning the receivables to be transferred to the factor.
- documents confirming the existence of receivables,
- VAT invoices with confirmation of receipt or shipment of goods, commercial contracts between your company and debtors.
3. Concerning debtors.
financial statements, forecasts of future financial statements, information on the current turnover with contractors with whom contracts are concluded, information on terms of payment and timely implementation, turnover in the current year, scope of cooperation with a given contractor-debtor,
the value of sales,
timely payment by the contractor,
monthly amount of receivables to be factored,
possible prepayments, immediate and deferred payments.
NOTE: There is no single factoring application template. Its form is always determined individually after an initial conversation with the factor. It may resemble a loan application; it may also be a list of receivables being sold. It all depends on the type of factoring and, above all, the risk posed by a specific contract.
STEP 3. Assessment of the factoring application.
After submitting the application and providing the necessary documentation, the factoring company analyzes the situation of the invoice owner and his contractors-debtors. This process, as well as the analysis of a loan application at a bank, consists of two stages:
STEP 4. Proposed factoring agreement.
- the first (formal) stage is the quality analysis of the submitted documents; the factor checks whether nothing is missing, whether the submitted documents are truly and correctly completed,
- the second stage (substantive) is a very thorough examination of the economic situation of the company and contractors-debtors, as well as commercial risk assessment - the factor must be sure that he signs a contract with a reliable company.
Transfer of the contract proposal by the factor. It is possible to negotiate the terms of the contract, provided that additional information is provided in favor of renegotiating the terms, such as:
STEP 5: Signing the factoring agreement.
- good economic situation of the invoice owner,
- good situation of the sector in which the activity is conducted,
- long-term cooperation with contractors-debtors,
- previous payment terms falling within the commercial terms proposed in the contract,
- the quality of the documentation presented,
- good cooperation with the factor so far'