What changes does the factoring service mean for the buyer and the seller?

When the factoring agreement is made with Swedbank Lizings, the customer continues to make invoices for goods to the buyers. In every invoice a reference is made that the invoice has been assigned; it is information about the assignment of the right to claim and the payment procedure: that the invoice is to be paid to the account of Swedbank Lizings.

Swedbank Lizings, having received the invoice, makes an advance payment (usually up to 90% of invoice amount) to the customer. On the invoice payment date, the buyer pays the entire invoice amount to Swedbank Lizings, which transfers the remaining 10% of the invoice amount to the customer.

What is recourse factoring?

Under a recourse factoring agreement: if the buyer is unable to pay an invoice financed by factoring, Swedbank Lizings returns the right to claim under the invoice to the seller and the seller returns the finance received for the invoice to Swedbank Lizings.

What is non-recourse factoring?

Under a non-recourse factoring agreement: if on and after the payment date of the financed invoice the buyer is insolvent or unable to pay the invoice for a longer time, Swedbank Lizings will compensate up to 85% of the invoice amount to the seller.
Usually non-recourse factoring is used in export transactions.

What is the minimum transaction amount for factoring?

The amount of every individual transaction (invoice) is not important. What is important is the total factoring limit amount, which is calculated by summing up the amounts of invoices in the granted deferred payment period. To get access to all the advantages of factoring, the most suited minimum factoring limit is LVL 15,000.

What transactions factoring is not suited for?

Factoring is not a means of debt collection and it may not be used if the buyer defaults payments. The buyer’s payment history must be positive.

What is assessed when the factoring application is examined?

When the factoring application is examined, not only the seller but also all the buyers will be evaluated. Also, the agreement between the buyer and the seller will be evaluated.