Factoring Services Offer

Operating under the approval of the Central Bank of Montenegro and in compliance with the Law on Financial Leasing, Factoring, Assignment of Receivables, Microcrediting, and Credit-Guarantee Operations, Financial Solutions (FS) offers the following domestic and international factoring services:

• Recourse Factoring
• Non-Recourse Factoring
• Reverse Factoring

To collaborate with Financial Solutions (FS) for recourse or non-recourse factoring, you need to have undisputed, outstanding receivables from creditworthy buyers that are due within a short-term period of up to 12 months, along with adequate business and financial documentation. FS provides a seamless, professional approach to factoring, tailored to support your financial needs efficiently.

To establish a partnership for reverse factoring, FS will determine a factoring limit that your suppliers can utilize in agreement with you. This arrangement will positively impact their liquidity while strengthening your market position.

FS charges an appropriate factoring fee and interest for its services. We are committed to providing fast and efficient factoring solutions, striving to complete all factoring transactions within 24 hours of receiving your request.

Recourse Factoring

Recourse factoring is a financial service where Financial Solutions purchases your outstanding receivables from a buyer, providing you with immediate liquidity. The amount disbursed is reduced by the interest and service fee, while Financial Solutions collects the full invoice amount from your buyer upon its due date.

With recourse factoring, the risk of non-payment is shared with you. This means that while the factor purchases the invoices and expects the buyer to settle them, if the buyer fails to pay within the agreed timeframe, the factor reserves the right to recover the funds from you, the seller.

Why Should Companies Use Recourse Factoring?

• Short-Term Financing: Sellers receive necessary funds quickly and in advance, while awaiting payment from buyers.
• Flexible Growth Financing: The funds obtained can be used to expand the business or invest in new opportunities.
• Reduced Administrative Burden: The factor manages invoice collections, saving the company time and resources.
• Lower Fees: Since the factor does not assume the risk, the service comes at a lower cost.
• Confidence in Buyers: When sellers trust their buyers’ creditworthiness and reliability, they willingly take on the risk, as non-payment is highly unlikely.

Non-Recourse Factoring

Non-recourse factoring is a financial arrangement where the factor assumes full risk for collecting payments from the buyer. This means that if the buyer fails to pay the invoice, the seller is not responsible for reimbursing the factor.

While this option is more expensive for the seller, as the factor takes on the risk of buyer insolvency, it provides greater security and protection against potential losses, making it an attractive solution for businesses seeking financial stability and reduced risk exposure.

Reverse Factoring (Supplier Financing)

Reverse factoring allows you to finance your company’s payables. In this arrangement, Financial Solutions pays the invoice on your behalf, and you repay the factor within a pre-agreed, favorable timeframe.

By utilizing reverse factoring, you can:

• Execute contracts more efficiently.
• Remain independent of inflationary pressures.
• Negotiate better pricing terms for materials or services.

This solution provides financial flexibility, strengthens supplier relationships, and enhances your company’s ability to manage cash flow effectively.

Why Should Companies Use Reverse Factoring?

• Faster Contract Execution: Companies can fulfill contracts more efficiently by using reverse factoring to pay obligations immediately, rather than waiting for payment deadlines.
• Payment Flexibility: Buyers can negotiate favorable payment terms with the factor, offering greater flexibility in managing cash flow.
• Protection from Inflation: Reverse factoring helps companies avoid the negative effects of inflation on costs, enabling contracts with suppliers to be secured on more stable terms.
• Improved Negotiation Power: Companies can negotiate better prices for materials or services, as suppliers are assured of prompt payment.
• Reduced Administrative Burden: The factor manages payments, allowing businesses to focus on core operations.
• Enhanced Trust Among Partners: Suppliers gain confidence in timely payments, fostering stronger and more sustainable business relationships.
• Liquidity Optimization: Companies can better manage liquidity by selling their payables to the factor, eliminating the need to wait for customer payments.
• Reduced Non-Payment Risk: The factor assumes the risk of buyer non-payment, lowering financial risks for the company.

The minimum fee cannot be less than €20.00 and is adjusted according to the maturity of the agreed placements. VAT is calculated on the fee at the applicable tax rate.

Default Interest Rates:

Default interest is calculated as the regular rate increased by 1/2 (one-half).

II Special Conditions for the Women’s Entrepreneurship Support Program (with the “Women’s Business” Mark):

Approvals for all companies are free of charge (the fee is €0).

III Special Conditions for the Factoring Product under the Support Program for Entrepreneurs and MSMEs in Collaboration with Center for Finance LLC:

• No approval fees.
• No interest on approved financing.

Note: Approval Rules

• Factoring Basis: Invoices must have a maturity period of up to 12 months and must not be overdue or disputed.
• Tariff Group Assignment: Will be determined based on an internal assessment of the creditor’s and debtor’s creditworthiness.
• Adjustments: The Board of Directors/Executive Director, within their authority, may approve adjustments to the above-mentioned commercial terms.