The Benefits of

factoring Presented by

1 What is factoring?

2 The different types of factoring

3 International Factoring Association

4 How does factoring work?

5 Risk Management

1

What is factoring?

What is factoring?

• Invoices vs. factors

• Factoring vs. Bank loans :- Financial Assets(Accounts receivables)- Receivables value- Parties involved

The current state of factoring market

Europe (66%)

Asia-Pacific (25%)

North America (4%)

South America (4%)

Africa (1%)

2014 2015 Variance

Europe (66%) 1 462 585 1 557 202 6%

Asia-Pacific (25%) 648 711 596 513 -8%

North America (4%) 103 501 100 530 -3%

South America (4%) 103 124 93 644 -9%

Africa (1%) 14 735 13 487 -8%

TOTAL 2 346 143 2 373 003 1%

FCI Global factoring Statistics 2015 by Region (all figures given in millions of Euros)

2

The different types of factoring

The different types of factoring

• Factoring is a financing technique whose type differs from one company to another. Indeed, there are different types of factoring such as:

Les types de services

d’affacturage

Classic Factoring (ou full

factoring)

Factoring in management

mandate ‘line by line’ (delegatedmanagement)

Repruchase the balance

Reverse Factoring

Factoring international

contracts

Factoring and Securitization of trade receivables

3

International Factoring Association

International Factoring Association (IFA)

• Help factoring community

- Information- Training- Resources required- Meetings, Conferences

4

How does factoring work?

How do we work?

The Process

Factoring benefits

FACTORING =

1) Financial Leverage

2) Improved management of accounts receivables

3) Tax deductible

= Release cash + Save time + Concentration on the main activities

= ACCELERATE YOUR GROWTH

Customer selection criteria

Opening documents:

- Administrators- Support Information- Supplier information- Banking information- Tax information- Information on accountsreceivable

Documents required:(after opening)

- Completed account opening documents- Acceptance letter from a mortgage by the bank- Mortgage Commitment Documents- Service contract- Specimen cheque- Change of Beneficiary Letter (seller)

The guarantee of trade receivables

Before the sale:(Prevention)

- Customer Selection- Investigations into the solvency of any new debtor- Definition of credit remedy and approval of factor

After the sale:(Surveillance)

- Ongoing monitoring of the accounts receivable quality- Review of information obtained from privileged sources (Equifax, Transunion, etc.)- Monitoring of the company's financial situation

The principal terms of a factoring agreement

• SALE OF ACCOUNTS RECEIVABLE

• REPRESENTATIONS AND WARRANTIES

• OBLIGATIONS OF THE SELLER

• EVENT OF DEFAULT

5

Risk Management

Risk Management

Credit Management

System

DashboardMonthly financial analysis

32

1

1) Credit Management System

Security : • Implementation of a control system

Vigilance : • Unauthorized activity can be detected

Flexibility : • The factor must be able to act quickly in crisis situations in order to minimize the impact

2) DashboardThemes Risks

Client risk assesment :• Credit analysis• Advances on accounts

receivable• Insurance, public liability and

merchandise

Very High

Access to information :• Monthly financial analysis• Internal communication• Newsletters

High

External• Competitors actions/ industry• Brand Management• Legal issuesInternal• independent monitoring

evaluation• self-identified problems

Moderate

Management Team:• Risk management• Performance• People (Expertise)

Very high

Objective:

• Limit the risks associated

with the insolvency of a

customer

Frequency:

• Updated monthly

Method:

• Sharepoint Dashboard

Content :

• Credit analysis

(Equifax/Transunion)

• Advances on accounts

receivables

• Debtors concentration

3) Monthly financial analysis

Objective: • Constant contact

Méthode : • Monthly e-mails

Content :• Newsletter• Initiatives• Indicators

5 0 0 P l a c e d ’ A r m e s

S u i t e 1 8 0 0 • M o n t r é a l Q C

H 2 Y 2 W 2 • C a n a d a

T 4 3 8 2 5 9 3 2 0 2 F 4 3 8 2 5 9 3 3 0 1

i n f o @ m o n t r e a l h e r i t a g e . c o m

Thank you!