Factoring

SEB offers factoring solutions.

• Factoring is financing of receivables and invoice management. You secure the payment obligation of your buyers to the extent of 100%. You are obliged to buy the invoice on behalf of the buyer if the buyer proves to be insolvent. Receivables from foreign clients are financed only if you have entered into a credit insurance contract.
   
• Export factoring with credit insurance means financing of receivables from foreign buyers and invoice management with the credit insurance intermediated by SEB. You excess in factoring with credit insurance is 10% of the invoiced amount. We only offer financing and invoice management if you have entered into a credit insurance contract yourself.
   

Factoring contract limit and obligor limit
The total limit of the invoices to be financed (the contract limit) and a separate obligor limit for each buyer are agreed in the factoring contract. The sum of the contract limit and the obligor limit is the amount that the total amount of the receivables financed by SEB and the receivables from one or several obligors may not exceed.

You submit the receivables from all of buyers listed in the contract to SEB. Lack of available contract limit or available obligor limit means that subsequent invoices remain pending until limit is released.

We would like you to include as many buyers as possible in the contract, so we can offer you better factoring terms by reducing risks as the financier.

We advise you to agree in the terms and conditions of the sales transaction with your buyers before you apply for factoring.

Factoring applicants must submit the following documents:

• application on the form provided by SEB;
• commercial contracts with the obligors (sales contract, contract for services, etc.), which are the bases for the invoices you would like to be factored;
• audited annual report for the previous financial year and balance sheet and income statement for the last quarter;
• additional documents (cash flow forecast, business plan, contracts with important suppliers, etc.) if necessary.

The following documents are required for entry into a factoring contract:

• passport or ID card of the company’s representative;
• authorisation document, if necessary.

Once you have entered into a factoring contract with SEB, you must submit the invoices meant for the buyers listed in the contract to us. The sales process and receipt of money take place as follows:

An overview of your factoring transactions is available to you in Internet Bank for Business.

Requirements for factoring invoices
You must send all invoices to be submitted to your buyers, including credit invoices, to SEB. It is important to make sure that

• your invoices meet the requirements set out in effective legislation;
• the payment deadline or payment term is noted on the invoice;
• a note, which advises the buyer that the claim is assigned and must be paid to SEB, is displayed in a visible sport on the invoice;
• the invoice is approved by the buyer (except export invoices);
• the documents evidencing transport of goods are enclosed with export invoices and approved by the carrier; and
• the delivery and acceptance certificate of work or services is enclosed with invoices relating to services. 

SEB offers factoring with credit insurance as a tool that helps to reduce the risks associated primarily with foreign buyers. We have entered into a credit insurance contract with our insurance partner, which allows us to offer you the option to reduce the credit risk of buyers with a factoring contract.

Our insurance partner and we will handle the debt collection if a buyer fails to pay an invoice that was financed with factoring. SEB is the beneficiary in the insurance contract. You don’t have to refund the advance payment your received to us and you only have to pay the fees set out in the contract (interest, handling fee, etc.) and excess.

Insurance does not indemnify for disputed invoices. You have to resolve any disputes with your buyers about the quality of goods and the performance of the sales contract. Making the sales contract as accurate as possible and documenting all communication between the parties makes the resolution of disputes easier.

SEB offers you financing of receivables from foreign buyers similarly to domestic factoring if you have already entered into a valid credit insurance contract. In such a case, you refund the advance payment to SEB if the buyer is in debt and you have to follow the terms and conditions agreed with your insurer in any actions required under the insurance contract.