Import factoring with/without unpayment risk takeover

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Import factoring is a modern guarantee alternative that enables you to obtain longer payment terms for the external suppliers’ invoices.
 

  • Possibility to negotiate longer payment terms with your external partners;
  • Cutting down expenses with money transfer, as the foreign payment turns into a domestic payment based on the debt assignment; 
  • No charges or fees.


This product is the ideal solution for your business if... 

for example, an exporter from Turkey wishes to sign a commercial contract with a trading company in Romania. 

For guaranteed receipts and in order to grant the Romanian importer a postponed payment deadline, the exporter contacts a factoring company in Turkey, which asks BRD to take over the risk of non-payment, the collection and management of the receivables. 

Preliminary phases:

 
1. BRD examines the possibility of taking over the risk of non-payment for the importer. 
2. The importer negotiates the payment deadline with its foreign supplier and informs the latter about its intentions to carry out the commercial transaction though factoring operations. 
3. The Export Factor contacts the Exporter to present the product.
4. The Exporter signs the factoring agreement with the Export Factoring.
5. At the request of the Export Factor, BRD guarantees the non-payment risk cover limit. 
 
Process:
 
6. The Importer receives the notice on the assignment of the commercial contract by the Exporter to BRD. All the payments related to the assigned invoices will be made only in the account of and to the benefit of BRD.
7. The Importer receives the merchandise or the service corresponding to the invoice issued by the foreign supplier.
8. On the due date, the Importer pays the equivalent value of the invoice in the account and to the benefit of BRD, according to the notice received from the foreign supplier.
9. BRD transfers the collected amounts to the Export Factor.
 
 
Who can start the operation?
 
  • The Export Factor – following the Exporter's request, the export factor asks BRD (the Import Factor) to take over the risk of non-payment and/or collect the receivables.
  • The Import Factor, BRD – having identified the opportunities of collaboration with the Romanian importing companies, the Import Factor provides the Importer with the import factoring service and, based on the received information, asks the Export Factor to contact the Exporter to present the advantages of this service.

 

Why import factoring and not a letter of credit/ bank guarantee letter?

 
Because: 
 
  • the importer does not have to bear any costs;
  • the importer no longer makes the foreign payment on the due date, but an internal payment, thus reducing the foreign transfer-related costs;
  • the risk of non-payment of the foreign supplier is fully taken over.