Nov 19 2015

Overdraft And Factoring – Opportunities For Small Businesses

Posted by domain admin in News

Overdraft Overdraft – a short-term loan that is provided by the bank by debiting the customer's account and the amount of write-offs may be greater than the balance on the account. As a result, the customer's account is formed negative balance, which is the overdraft. Overdrafts may be allowed, that is agreed upon with the Bank, and unresolved, the client write a check or payment document, not having a permission of the bank. Overdraft rate is calculated daily on the outstanding balance, and the client pays only for the amount he actually used. A legal person can use an overdraft facility only bank in which he has a bank account.

Services overdraft credit provided by all major banks in Russia. In particular, the Savings Bank of Russia the maximum term for such a loan is 30 days. Maximum amount overdraft in the main bank of the country is tied to the turnover of the company account and from 15% to 40% of the total monthly turnover. Alfa-Bank provides overdraft loans of up to 60 days and the maximum amount of debt may take up to 50% of the average monthly income to the account of the company. For longer periods offer overdraft KMB-Bank and Rosbank – here the company can use such loans for up to 12 months. Limit overdraft in KMB-Bank is 40% of monthly income to the account and the interest rate – 10,5-17%. Factoring Factoring is a finance provider in exchange for a concession to the debt buyer for goods shipped or services rendered.

In simple words, a bank or factoring company pays you money for goods sold instead of the buyer, and his duty to recover its own, without your participation. Thus, your business can get live money, and the factor (a bank or a specialized company) – Part of your duty to the debtor. Factoring allows suppliers to receive payment for their goods and services prior to implementation to the final consumer. Factoring – a rather simple but expensive form of short-term financing. The use of factoring is most effective for small and medium business, expanding sales or entering new markets. In addition, factoring can useful to create business, lack the resources because of late receipt of payments from debtors. In factoring there are some obvious advantages over traditional business loans – less stringent requirements for the business, there is no requirement of registration of mortgage, etc. However, factoring – a much more expensive form of financing. Bank or a specialized company charging a customer's factoring commission, which Russia is in the 15-20% of the debt. In addition, the loan interest will be charged with a daily balance paid by the customer upfront. And finally, certain fixed fee charged for processing the documents. Factoring can be open – in this case, the debtor is notified of a transaction, or closed, when the debtor remains in ignorance. Of course, the second method costs considerably more expensive. In addition, factoring commitment often has the right regress – that is, a bank or factoring company has the right to demand repayment if the debtor refuses to meet its financial obligations. According to the experts, the share of factoring in bezregressnogo coming years will continue to grow. In Russia there are over 100 major banks and specialized companies providing factoring services. Among the largest banks offering such services – International Moscow Bank, mdm Bank, Sobinbank, Nomos-bank Banque Societe Generale Vostok. Best-known factoring companies – Trust, Eurokommerz, National Factoring Company.

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