What is Factoring?
It is the transaction of providing financing for, intermediating in or guaranteeing collection of time receivables that have arisen or will arise from sale of goods and services
Who can benefit from factoring services?
Real persons or legal entities that produce and sell goods and/or services may benefit from factoring services.
What is the legal basis for factoring?
While factoring companies that are required to be incorporated as joint stock companies were previously subject to the supervision and inspection by the Undersecretariat of Treasury within the scope of the “Decree for Money Lending numbered 90”, they have been taken under the supervision and inspection by the Banking Regulatory and Supervisory Authority (BRSA) as per the Banking Law numbered 5411, and Factoring Companies gained a legal structure of their own on 21 December 2012, with the Law on Financial Leasing, Factoring and Financing Companies numbered 6361 and the relevant regulations.
How does factoring differ from bank loans extended against checks/bonds?
In bank loans extended against checks/bonds, the check or bond constitutes security for the loan, and it is continued to be monitored under bonded receivables in the assets column of your balance-sheet. In liabilities column, it is shown under financial liabilities. However, in factoring, check/bond represents directly the receivable in connection with the invoice. The amount of transferred and assigned receivables are removed from the bonded receivables account in the balance-sheet, converted into cash, and is not shown under the financial liabilities account.
What kind of services is offered under factoring?
Financing: is paying a specific portion of the receivable amount, which was assigned by the customer to the factoring company, to the seller company before maturity. Advance payment rate is determined based on maturity of the assigned receivables, trasnaction volume and credibility of the receivables.
Guarantee: means the factoring company’s act of undertaking the risk of non-payment by the debtor within the framework of the provisions of the factoring agreement. In irrevocable factoring, the risk of non-payment of the receivable is undertaken by the factoring company within the framework of the limits and conditions agreed at the onset of the relationship.
Collection: means the service of following up, collecting the receivable and making the relevant reportings provided by the factoring company to the customer.
The customers may benefit either from such services all together or receive such services separately depending on the scope of service of the factoring company they work with.
Which receivables are not suitable for factoring?
Generally, receivables arising from investment goods, products that can easily spoil and intra-group sales are not suitable for factoring.
What are the costs in factoring?
Basically, there are two types of costs: Factoring commission and factoring fee.
Factoring fee: means the interest amount received by the factoring company in consideration for the advance payment it made available in cases where financing service is offered.
Commission. means the cost that that is calculated based on receivables that have been assigned and that varies depending on the maturity of the receivables and the transaction volume.
The amounts received by the factoring company in addition to the factoring fee and commission (for mailing, EFT, remittance, etc.) are received as expense.
The revenues such as the commission, fee and expenses received in consideration for the factoring services are subject to BITT. The factoring fees, commissions and expenses arising from foreign exchange earning transactions are exempt from BITT.
How can I make transactions at Optima Factoring?
If you wish to convert your time receivables represented by invoices or similar documents into cash, please contact with the closest branch or agency as specified in the Contact section of this website, and consult with our customer representative.
What are the documents requested from the companies?
It is necessary that the documents set out in the section under the heading “Application and Required Documents” are delivered to our company before conducting any factoring transactions.
