1.- INVOICE COLLECTION AND MANAGEMENT SERVICES

A) Analysis and Classification of Clients.
For Factoring, the company refers these tasks to EUROFACTOR Hispania, S.A., whose activity includes ongoing evaluation and assessment of risks and who are in possession of more unrestricted sources of information that allow decisions to be taken in accordance with the requests of the Client.

B) Improved Quality of Client Portfolios.
In two areas:
- Cancellation of Debtor Clients.
- A precise credit analysis of each Client.

C) Client Portfolio Management.
The company refers portfolio management to EUROFACTOR HISPANIA, who in turn, provides continuous, reliable information on the status of each loan and that of each Client.

The factoring client may check on the status of each of his debtors portfolios at any time through our online system, EOL.


D) Sales and Payment Accountancy.
Moreover, by referring the credits granted to EUROFACTOR HISPANIA, the company reduces the number of buyers in its accounting books to just one: the FACTOR.

As a result of this service, the company acquires considerable information for accounting purposes and in which a substantial part is made up of sales and payments received given that with the information received through EOL, the client will have specific information regarding sales by time intervals (weekly, monthly, or quarterly) as well as information on collections received or unpaid invoices.

E) Managing Invoice Collection.
An efficient system for managing invoice collection:

• minimizes the gratuitous credit the company grants the Client,
• entails careful monitoring of due dates which minimizes payment delays, and prevents buyers from receiving financing at the Client’s expense by voluntarily delaying their payments. This is especially important if the mode of payment is not a bill of exchange or an invoice but rather a check or money transfer,
• a legal process is begun to reduce outstanding amounts to a minimum.

In any event, if the company contracts Factoring services, the Factor shall be in charge of dealing with invoice collection. This is particularly important when dealing with exports which, in addition to the above-mentioned complexities, include those derived from a possible lack of knowledge about the market, complications in managing repayment, idiosyncratic barriers, etc.

2.- FINANCING

Upon the seller’s request, EUROFACTOR Hispania S.A. may advance up to 90% of the amount corresponding to the credit granted; that is, pay the seller before collecting from the buyer.

This financing system is not incompatible with other systems. The company may use the risks assigned by its banks differently, given that the rotation of its current assets is ensured with EUROFACTOR HISPANIA.

We can therefore say that with Factoring a company’s credit capacity increases.

3.- COVERAGE AGAINST DEBTOR INSOLVENCY

In this situation, the company has three forms of hedging:

• self-insurance by which the company protects itself through the corresponding provision,
• contract credit insurance,
• or contract No Resource Factoring services.

4.- COMMERCIAL (Term of Sales flexibility)

With Factoring it is not necessary for operations to be documented using bills of exchange or invoices. This has three advantages:

• Faster rotation of circulating capital. Obtaining the corresponding payment (more so if it must be accepted by the debtor) normally entails additional delay. On the contrary, with Factoring, an invoice suffices.

• Access to Clients that do not accept bills of exchange or invoices as forms of payment and whose payment system is that of checks or money transfers.

• Acquiring financing on these sales.

5.- DECONSOLIDATION

Advances granted to a seller on credits granted to the Factor are not considered as loans granted by the latter to the former, with the due credit guarantee, but rather an advance on the payment of the invoices. This, coupled with 100% hedging allows for the “deconsolidation” of the client’s account thereby obtaining a better ratio in terms of liquidity, solvency, EBITDA...