Companies experiencing financial hardship
Secure your financing in difficult economic phases or during restructuring processes.
Requirements of companies experiencing financial hardship
The benefits of factoring
- Sustainable financing that is adapted to company developments
- Possible implementation in or out of court
- Extremely fast implementation (two weeks)
- Resistant to change in company control
A closer look at factoring for companies experiencing financial hardship
Implementation or renegotiation of a factoring solution in or out of court
When a company is experiencing financial hardship, whether temporary or longer-lasting, securing financing solutions can be a real challenge.
Banking partners tend to reduce their exposure and often cut off any short-term credit lines. Whilst historically a financing solution for companies undergoing growth and expansion, factoring has always been an ideal tool for companies trying to navigate their way through difficult periods. Because it uses accounts receivable as a security, factoring is more robust and sustainable than other conventional banking solutions ('Dailly Act' financing, loan, discount, overdraft facility, etc.).
Any company filing for bankruptcy or under out of court debt settlement proceedings with a factoring solution already in place should ensure that it has the support of the current partner. If this support is not confirmed, factors can be changed quickly. Factors do not always react in the same way to difficulties: some will be forthcoming in their support and have solid experience, whilst others quickly restrict their financing and seek to terminate agreements. When you have a partner prepared to offer support to companies experiencing financial hardship, a whole new range of possibilities becomes available. It is indeed possible to widen the remit of factoring, increase financing and best secure cashflow.
Business case
Our assignment
Tender process and implementation of a factoring agreement to replace an existing factor
What we did
- Technical risk analysis (concentration, client-supplier offsetting, assignor risks)
- Close involvement of our team of experts in factor auditing and during the preparation phase of the factor’s credit committee
Background
A French sub-contractor trading in the aeronautics sector experiencing financial difficulties, and whose factor financing is key to the continuation of its activity
Characteristics
- Business activities: Design and production of electrical sub-assemblies for industry
- Country: France
- Clients: Companies operating in the aeronautics and automobile sectors
- Type of contract: Confidential balance assignment
- Credit line: €50m
- % of financing: 90% of assigned receivables
- Cost: less than 1.5%
- Term: open-ended
- Credit insurance: delegated
Aims
- To seek a replacement for the current factor (deadline: faur months before settlement)
- To obtain equivalent financing conditions for a client portfolio that is heavily concentrated in the aeronautics sector
Our added value
- Identifying technical risks and recommended solutions to allow the factor to provide a financing solution in total security
- Issuing of a credit agreement to improve financing ratios
- Ongoing consultancy to the finance team to complete the project by the deadline imposed under the existing agreement
- Coordination and regular oversight of the relations between the existing and new factors taking over receivables, to avoid any cashflow shortfall during transfer of the agreement
