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Frequently Asked Questions (FAQ)

Why factoring?

This is an effective solution to your company's cash flow, especially when you work with deferred payment, which most customers require today. Factoring offers you the opportunity to take advantage of extended payment terms as an advantage over the competition.
Another advantage is that the use of insurance covers the risk of non-payment by the customer up to 85% of the account receivable. Last but not least, you save the administrative cost because we take over administration, dunning and alternatively recovery of debts for you in cooperation with the insurance company.

Who is suitable for using factoring service?

Factoring service is suitable usually for business and manufacturing companies from the small to corporate companies, with regular repeated deliveries to several regular customers, with due dates from 30 to 90 days (exceptionally also longer) and an annual turnover of factoring account for at least 10 million CZK. Turnover with one customer should not be higher than 30% of total cooperation, there should not be mutual credits and invoicing can not be in advance. The company should have at least an annual history and satisfactory financial situation.

When is domestic factoring appropriate for my company?

Domestic factoring is appropriate for your company when you supply goods or services on open account in the Czech Republic. It is an effective tool to improve cash flow and reduce the risk of customer non-payment.

When is export factoring appropriate for my company?

Export factoring is appropriate for your company when you export products or services to open account abroad. As in the case of domestic factoring it is an effective tool to improve cash flow and reduce the risk of customer non-payment. Thanks to the membership in the international network of Factors Chain International (FCI) we provide export factoring at the highest possible level. In case of non-payment of the foreign buyer we pay to our clients the full amount of the invoice value.

Will you also monitor my foreign receivables?

We are also ready to do this. Our highly specialized staff of international client service department communicates with the customer, with the factoring company abroad, makes insistent demands for the payments of debts, collects receivables and manages receivables of our clients.

When is import factoring appropriate for my company?

Import factoring is appropriate for you when you buy goods or services from foreign suppliers on open account with a longer payment term (30 to 90, exceptionally 120 days).

What services does factoring include?

It is financing, administration, collection, potential dunning or insurance of account receivables. We assume the risk of failure to pay by customer both at home and abroad. Thanks to our membership in the international network of Factors Chain International (FCI) we can assume the risk in case of export factoring up to 100% of the nominal value of the account receivable.

How does factoring work exactly?

The client will deliver goods or provide services to its customer. The client gives the assignment clause on the invoice which informs about the assignment and routing customer payments on behalf of the factoring company. The customer receives one original of the invoice and our factoring company receives the other original at the same time. We will pay to the client so-called advance payment of 70–90% of the nominal value of the account receivable. The rest of the account receivable is paid after the payment made by the customer.

What if the customer is in arrears with payments of his obligation?

Thanks to our experienced client service, call centre and a sophisticated system we are able to remind customers both in writing and by telephone.

What if the customer does not pay at all?

It is important what form of cooperation is set. In case of recourse factoring the assigned account receivable is after the end of period of recourse (standard 90 days overdue) reassigned back to your company (unless a continuation of collection is agreed). If the account receivables are secured by insurance or they are purchased via non-recourse factoring then your risk is secured up to pre-determined amount, usually up to 85% of nominal value of the account receivable, exceptionally up to 100%.

Do you verify credit standing of my customers?

Yes, we verify the credit standing of your customers in close cooperation with the department of risk of Komerční Banka and in case of non-recourse factoring we cooperate also with the insurance company.

Will our business relationship with customers be changed somehow?

The method of payment will be changed for your customers. They will pay to the bank account of factoring company. Likewise they will report any trade disputes, claims and credit notes received.

What is meant by securing the risk?

We will examine the possibility of insurance of customers at some of the insurance companies, which cover the risk of insolvency or protracted default of the customer up to 85% of nominal value of account receivable.

What am I supposed to do if I am interested in factoring services?

You can start right now and on-line. Fill in the Application Form for Cooperation with basic information about your company and its customers. The information is forwarded to our business manager who is responsible for your region. He will arrange a personal meeting with you, where the principles of factoring will be explained and your questions will be answered. Then the business manager will offer you a service adapted to your specific business case.

For how long is factoring agreement concluded?

The agreement is concluded for an indefinite period with bilateral notice period of 1 month.

When can I start to draw money?

It is possible to start assigning new account receivables immediately after signing the factoring agreement. Assuming compliance with all the relevant requirements we pay out the funds within three working days. Usually, it is credited to client's account following day, if you have the account with KB, it can be transferred the same day.

How much money do I get after supply of goods or services?

So-called advance payment is between 70 and 90% of the invoice value.

And when do I get the remaining part of the payment?

You receive the remaining part after the payment from your customer is credited to account of Factoring KB, or when conditions arise under which we are obliged to pay to the client regardless of the payment from the customer. From this payment (so-called balance paid), we take the fees according to the factoring contract.

Is it necessary to secure provided financing?

In the case of recourse factoring the bill is normally used to secure financing. For other products, additional security is not required.

How much do I really pay?

Costs depend on the extent of services which the client requires. The standard costs consist of two components. It is a factoring fee (commission), i.e. the cost of overall administration and management of account receivables and interests, i.e. annual interest on the financed amount. Both items are expressed as a percentage. It is necessary to include in the total price potential fees according to the price list, such as fee for Internet application eFactoring or bank fees. The total costs are usually in the range of 1 to 2% of factoring turnover.

Why should I choose factoring instead of credit?

The advantage of factoring compared to credit is not only the flexibility with which we can provide quick financing to our clients. Its definite and inseparable elements are mainly services. It is receivables management, collection, dunning customers and especially the possibility of insurance against the insolvency or protracted default.

How does the assignment of account receivables work?

We have prepared high-secure Internet application eFactoring for our clients that enables to assign receivables. This form accelerates financing while reducing the administration.

Can I monitor my account receivables online?

Yes, everything proceeds in eFactoring, which is non-stop available with the certificate and password. It allows you to control assigned receivables, payments from your customers, and the amount of your financing limits to individual customers; simply you can obtain all necessary information there.

Why should I choose Factoring KB on the Czech market?

The reason is clear. Since its founding in 1997, Factoring KB has gained a lot of experience in domestic and foreign markets. It belongs from the beginning to the group of Komerční banka as its 100% subsidiary company and since 2002 also to the Société Générale (SG) group. Cooperation across the group at home and abroad provides a big competitive advantage. It cooperates very closely with Komerční banka in areas such as risk management. Strength is the membership of Factoring KB in one of the largest international factoring network Factors Chain International (FCI) with more than 200 members in over 60 countries. Factoring KB is also a founding member of the Association of Factoring Companies in the Czech Republic and a member of the Czech Leasing and Finance Association.


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