FACTORING IN SWITZERLAND

WHAT IS FACTORING?

Alternative form of financing

Protection against losses on receivables

Involves the ‘factor’ buying outstanding invoices/claims/receivables from the factoring client (usually a company/enterprise) on an ongoing basis.

A pre-defined percentage is kept with the ‘factor’, as security deposit.

FACTORING IN SWITZERLAND

FACTORING IN SWITZERLAND

REASONS FOR LOW GROWTH

Less demand for factoring as such – only used by large companies.

Only seven factors present in the market

High average period of debt payment by debtors (45 days).

ROLE OF FACTORING IN SWISS FINANCE

MARKET

Forms a small proportion of the Swiss Financial Market.

Less than 1% contribution to the Gross Domestic Product (GDP), as of 2012.

Mostly used by large companies, as opposed to global trend.

Seven factors share the market.

FACTORING IN SWITZERLAND

• This shows that factoring is directly dependent on economic prosperity.

• 2 categories of factoring –

a) B2B transactions (Business-to-Business)

b) B2C transactions (Business-to-Consumer)

COMPANIES USING FACTORING

Companies who do not run any debt collection operations of their own.

Companies wishing to finance their expansion

Companies wishing to protect themselves against losses on receivables

TYPES OF FACTORING

• TRUE/FALSE FACTORING

• With false factoring, the credit risk remains with the factoring customer.

• OPEN/SILENT FACTORING

• In case of open factoring, the invoice indicates whether the receivables have been paid or not. It is not so for silent factoring.

• EXPORT FACTORING

• the factor accepts claims arising from cross-border transactions

EXPORT FACTORING Highest growing form of factoring

FACTORING PLUS SERVICE

Factoring client receives 90% of the receivables.

The same is given in 48 hours.

Ensures high liquidity and almost zero credit risk for the clients.

Provided by Debtors Service Ltd., a subsidiary of Swiss Post.

SAMPLE FACTORING COMPANY

• Name: Credit Suisse

• Criteria for selecting companies:

• Solid customer base

• Suitable credit rating

• Immaculate book-keeping

• Sales of 1 million Swiss francs per year

• Accounts Receivables must be businesses, and not individuals

THANK YOU

ANY QUESTIONS?