With the type of product IMPORT FACTORING you can diversify your product portfolio so that you expand your client relationship also with professional financial institutions and worldwide acting global banks who are offering cross border factoring transactions in their countries. With the exchange of experiences and views with your new partners about international factoring markets, cross border transactions, different product interpretations  and risk situations you get a higher awareness of this financial product combined with all risk potentials. These new aspects from various international markets can be a valuable benefit for your group internal handling of factoring transactions with your clients in your domestic and export markets. Additionally you increase your turnover and revenues which also strengthen your market position.

Offering IMPORT FACTORING services to worlwide factor partners need to be done on a very professional basis. The requirements of a high service quality and a quick reaction for credit applications are already a kind of standardized handling. The service to be provided also needs to include a high risk appetite (preferably reinsured by credit insurer) and the understanding of the needs of the factor partners and their clients. In addtion to that you also have to build up an educated service and customer oriented team to support the factor partners for their daily requests and questions which occur based on the original trade and deliveries between exporter and importer. Problem-solving skills are also necessary to be a flexible and reliable import factor for your worldwide partners. This finally satisfies and convinces the exporting clients in the countries of origin to maintain the services and benefits of cross border factoring transactions. 

Deutsche Factoring Bank is offering import factoring services almost from the beginning of our FCI-membership in the year 1971 and always played an important role in developing this product within the chain.  Deutsche Factoring Bank continues to view itself as being among the quality leaders of import factoring services. 

Jens Stürmann

Deputy Head of International Business

Deutsche Factoring Bank

Import factoring is used in international transactions, where parties of the transaction operate in various countries and want to limit the risk of the transaction and customer on the particular market.

In most cases the import factoring request is initiated by the factoring company of exporter (Export Factor), who is approaching the factoring company acting in the country of the importer (Import Factor) with the request to grant the limit for the customer (credit cover). 

The credit limit for importer is granted after verification of the importer financial standing and obtaining credit insurance line from the reputable insurance company. So in fact Import Factor takes over the credit risk on receivables assigned within the granted limit. Moreover, Import Factor monitors and settles the payments of the local importer. Communication between factors is smooth and supported by international EdiFactoring.com platform.

Such a construction is win - win solution for the parties of the transaction, due to the fact that Import Factor is able to check the financial situation of the importer and monitor importer payments on the local market, whereas Export Factor receivables are free from the credit risk. The benefits for Import Factor are obviously opportunities for cross sell, thanks to possibility to enter into relationship with the verified importer. Risk of Import Factor is mitigated by reassuring receivables by the reputable insurance company, thus import factoring limits are granted to the companies with acceptable financial situation with granted insurance limits. Furthermore, non-payment risk of importer is mitigated by thorough monitoring of payments by Import Factor, staying in the close contact with the client and identification of potential warning signals at the early stage. Importer executes payments to the account of the reputable financial institution in his country what further improves the safety of transaction.

 Pekao Faktoring, the largest factoring company in Poland, has been offering import factoring for over 20 years. Over two decades of experience on this field proved, that this product brings benefits to all counterparties of the transaction.

Marek Skiba

International Manager 

Pekao Faktoring Sp. z o.o.

What are for you the advantages of being an import factor? (response may include for example increase the possibility of cross selling, finding new customers, help with collection, dispute settling, etc)

Stephan Mett, Director of Client Relationship Management: 

There are some advantages to mention: First of all, there is the diversification of our product portfolio on international markets, which increases our awareness worldwide. These contacts have often helped to establish customer relationships in domestic business.

Germany is not only ranked third in the world export championship, but also as an industrial location, dependent on the import of raw materials and goods. As an import factor, we support the domestic economy, but also see ourselves as a link between foreign trade relations and help to strengthen them. Together with our partner factors around the world, we share the risks in international money and goods traffic. The export factor takes responsibility for the seller. We bear the risk of default on the part of the buyers, because we can often assess their credit quality better than the suppliers. This allows exporters outside Germany to deliver goods quickly without having to worry about not being paid for their services. We have a professional risk management that reduces fraudulent activity and credit losses. Should nevertheless a damage occur, we make a financial compensation within a short period of time.

Can you share experience on being an import factor? (for example, to explain if you do your own risk assessment or if you use a credit insurance company)

Martin Rubek, International Client Relationship Manager: 

Our service to CoFactors is based on two pillars: service quality and quick reactivity. How are we able to realize that? We generally re-insure the buyer’s risk through one credit insurer. We can automatically process the CoFactor’s requests through our software interface with the credit insurance that is linked to our factoring system. This makes the daily handling of international business fast and efficient and helps to shorten our response time towards our CoFactors. We also have very short decision taking processes based on a close cooperation with our related departments, e.g. the credit limit department or the litigation department. Furthermore, we have organized ourselves in that way that we can flexibly cover all time zones and also being able to replace each other. I am one of two client relationship managers with a dedicated geographical region, but I can take any time over the CoFactor’s requests from my colleague. 

Last but not least, we work with the same international team since many years and have improved our efficiency further and further while maintaining a constantly high level of service quality. Personally, I really like to work within such an international environment, experiencing different cultures and languages, which makes my daily work always different and interesting.

For how long are you offering Import factoring?

Martin Rubek: 

We are offering import factoring since more than 20 years.

Why do you suggest other FCI members to offer as you Import factoring?

Stephan Mett:

All the advantages, I have explained in the first question, can also be relevant for other factoring companies, if they apply to their business model.

The more members we can count in the FCI, the denser the network of our joint service offerings. Professional factoring in international business can only be represented by those who commit themselves as a member to clear, uniform rules. Of course, we compete with other factoring groups. At the same time, we need each other because the co-factor business is always a joint project. By the way, cross-border friendships have developed that promote mutual understanding of each other's history and culture. Especially in the current time, we learn more than ever the value of such personal connections.

Experience and history as an import factor Our experience is more than 20 years since Mizuho Factor’s start. We are taking buyer’s risk by our own risk regarding Japanese company. We manage either notification or non-notification factoring at EF’s request.

For Non-notification factoring, we provide only credit cover. Export factor shall manage collection and inform us of the result by FCI EDI system. In case of non-payment, we allow 60 days grace period for export factor as notification deadline.

For Notified factoring, we ask the export factor to send us a copy of introductory letter before first assignment. We conduct comprehensive explanation for an importer who does not know import factoring at all. After above introduction we send the notification of assignment and confirm the payment instruction notified through the introductory letter sent from the seller to the buyer. We ask the buyer to verify invoice details and inform us of discrepancy, if any. If the buyer rises dispute, we inform of details to EF and ask them to solve asap. The buyer shall pay to the export factor’s account directly. This scheme enables fast transfer of cash, save burden and cost for both factors.

Advantage of being an import factor We can enjoy additional profit by acquiring new business brought by export factor without our sales effort and staffs. Because experienced import factoring providers are very few in east Asia, FCI members would appreciate our import factoring function.
We convince our activity of import factoring strengthen not only Mizuho’s status within FCI members but also FCI’s total capability. We recommend all members who have good credit rating shall introduce and strengthen import factoring activity so that FCI’s two-factor transaction may expand in future strongly.

 

Linguistic, legal and time differences are aspects that hinder efficiency when it comes to international trade, especially when you enter a new relationship. Despite digitalization, having boots on the ground is not only still relevant, but can actually make the difference between a sound business and loss. In the Two-Factor System, these boots are filled by Import Factors and, at UniCredit Bank (Romania), we proud ourselves with 20+ years’ experience in this respect. 

From an underwriting perspective, UniCredit Bank (Romania) performs this process in-house, with the insurance coming in only as an additional comfort. While this approach means that, in some cases, our response time is higher than the GRIF expected one, it also allows us a fuller picture of the Debtors’ status-quo and of where things may go wrong. 

From a servicing perspective: being there for our partners, correspondent factors and buyers alike, remaining impartial and ensuring that payment obligations are properly met, providing support in case of commercial disputes, these are our drivers. This is what we are aiming to provide our Export Factors with and what we expect from our Import Factors as well, as this is the approach that brings value added to all parties.

In our 25-years’ experience in the Two-Factor System, we have seen that, in the end, sustainability is what matters: not the initial speed of approval, but the value-added in a consistently high-quality service quality of an Import Factor, which quickly becomes essential in the business development of the Export Factor. And when you bring value added to other businesses on the long term, your cross-sell, as well as your walk-ins, increase exponentially.