Factoring is a form of short - term crediting, when customer transfers to the bank the monetary claims under his invoices for products sold or services provided to his buyers, and the bank, by purchasing the monetary claims of the customer to his buyers, pays to the customer the factoring advance payment according to invoice produced.
Benefit to the seller:
- The seller can obtain funding without pledging its property;
- The seller can offer its buyers more favorable settlement conditions and longer periods of payment;
- The seller can save monetary funds by using discounts from suppliers for earlier payment.
Benefit to buyer:
- Buyer can obtain longer period of deferred payment;
- Simpler settlement with the seller (in a specified form and with fixed payment period).
The bank establishes the factoring and buyer’s limit.
Factoring limit used (determined maximum amount of debts of buyers to the customer) is calculated as sum of all the factoring advance payments paid to the customer according to submitted invoices.
The buyer’s limit means an established maximum amount for one buyer, within which the bank pays to the customer the factoring advance payment.
The Bank offers non-recourse factoring and recourse factoring:
• In case of non-recourse factoring the client shall not bear the risk of default on payment by its customer. In this case, the Bank does not require the client to provide collateral measures, as the client’s buyers shall be insured by trade credit insurance provided by Compagnie Francaise d'Assurance pour le Commerce Exterieur Lietuvos filialas (Coface). In case of non-payment of invoice by the buyer, the insurance company shall pay for it.
• In case of recourse factoring, the client shall bear the risk of default on payment by its customer. In case of non-payment of invoice by the buyer, the Bank may require the client to pay for it. The collateral for recourse factoring may be real estate or other property. The real estate or personal property offered for mortgage must be evaluated by independent property evaluators.
For companies dealing with foreign legal entities, the Bank offers international factoring service. If trade credit insurance is provided by Compagnie Francaise d'Assurance pour le Commerce Exterieur Lietuvos filialas (Coface), the factoring service is available in all European Union countries.
Conditions for granting the factoring service:
• Period of factoring agreement – max. 12 months;
• Percentage of the factoring advance payment is up to 90% of the invoice amount;
• Period of deferred payment – up to 90 calendar days (can be longer if agreed by the parties).
How Can the Factoring Service Be Obtained?
To get the factoring service, please call information phone number and agree on meeting with a specialist of the bank or fill a application and visit the nearest client servicing divisions or branch for consultations. It is necessary to have the documents specified in the application.
Fill in the credit application (in lithuanian)
If the bank makes positive decision, the factoring limit shall be granted after making a factoring agreement.
Charges of factoring
Fee for administration of factoring agreement
from 0.75 % of factoring limit amount + VAT
Account administration fee
0.5 % of every invoice amount + VAT min. Eur 2.90
Amendment of conditions of factoring agreement on initiative of customer
from 0.5 % of the balance amount
Debtor's risk rating:
- Lithuania-registered companies
Eur 35 + VAT
- foreign-registered companies
Eur 65 + VAT
Concluding the agreement for transferring the debt to another entity
0.5 % of the loan amount, min. Eur 90
Sending the notices of failure to fulfil the obligations under the faktoring agreement by mail
Eur 7.24 each