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News

13.12.2013

NFC becomes first organisation joining EXIAR's export factoring insurance programme for SMEs

Moscow, 13 December 2013– The Association of Factoring Companies (AFC) has announced the launch of a support programme specially for MSPs at a press conference: factoring financing of accounts receivable, with insurance coverage provided by the Russian Agency for Export Credit and Investment Insurance (EXIAR).

The programme is intended for SMEs exporting to the CIS and Baltic countries on a deferred-payment basis, and which meet the requirements of Federal Law 209-FZ.

The Factor (a factoring company or bank) provides financing for a Russian exporting SME on the basis of a contract for export factoring without recourse, and in the currency of the contract (the rouble, US dollar or euro). EXIAR's insurance policy protects the Factor from the risk of non-payment of the delivery financed by the Factor. One notable feature of the programme is that EXIAR has set a single insurance tariff, regardless of the country that the exports are destined for or the credit rating or the credit quality of the foreign partner. This is in order to ensure a competitive export factoring offer for SMEs. The maximum payment deferral length for supplies assigned to factoring is 120 days. The cost of financing is determined based on the size of the delivery and the length of deferral.

NFC (the National Factoring Company) became the first to join the programme. In doing so, NFC has been able to substantially increase the number of countries in which the Factor is able to offer clients factoring financing without recourse to an exporter, in the event of non-payment by a foreign partner. This primarily refers to the CIS. This project is creating opportunities to increase exports from Russia to these countries, as suppliers will now be able to ship goods without worrying about the risk of not being paid. SMEs can now take advantage of the solution offered by contacting NFC. Another member of the AFC is planning to join the programme by the end of this year. The pilot stage of the project will run until the second quarter of 2014, at which point any interested organisations operating in the Russian factoring market will be able to join.

Artyom Azarchenkov, Member of the Management Board – Head of underwriting, said: "When working on the conditions and mechanisms for providing insurance support for SMEs engaged in export, it came to light that in the current environment, export factoring is one of the accounts receivable financing tools for SMEs which works in practice and is ready to be applied on a wide scale. It requires no additional collateral, and effectively raises the liquidity of export operations. The insurance protection provided by the Agency will enable banks and factoring companies to offer SMEs financing without recourse to the exporter. This development will ensure that SMEs will have access to a modern mechanism of financing export operations. It will create opportunities for SMEs to increase their exports, having full protection against risks connected to the foreign partner's failure to fulfil their obligations. In this regard, the Agency has designated the creation of a special programme for insuring export factoring as one of the areas in which the organisation will be providing support to export-oriented SMEs."

Corneliu Robu, Deputy Chairman of the Management Board of NFC, said: "There are hardly any factoring companies in the countries of the former Soviet Union which could assess the risks related to consumers located there. This significantly hinders the ability of NFC to meet the needs of clients in terms of financing and eliminating the risk of non-payment for deliveries to these countries. We hope that, on the one hand, NFC's participation in this project will, in all likelihood, enable us to increase the number of export factoring services, while on the other hand assist our partner, EXIAR, to implement their plans to support SMEs engaged in export, as well as to develop an export financing system secured by their insurance coverage."

Dmitry Shevchenko, Executive Director of the AFC, said: "Members of the Association of Factoring Companies are currently working on improving legislation dealing with international factoring in Russia. The consolidation of EXIAR's and the AFC's efforts to create a specialised, practical and beneficial product for exporters was a logical and rational next step in this process. This is something which synthesises the best parameters of international factoring and export insurance. Our objective – to increase Russian exports – completely coincides with the objective of this project. The success of the pilot stage should provide a strong impetus to fast-track the changes to legislation which the AFC is pushing for. We also see our role as providing access to EXIAR's programme for all interested and responsible participants in the Russian factoring market."

The press conference (in Russian) can be viewed on the RBC website:

http://presscentr.rbc.ru/pressconf/2013/12/13/1461/

Info:

The Association of Factoring Companies(AFC) was established in Moscow in 2007 as a professional association of participants in the Russian factoring market. The AFC focuses on creating common principles and approaches to factoring in Russia, including from a methodological, regulatory, and ethical standpoint.

The AFC unites banks and factoring companies with a combined factoring turnover of approximately RUB 700 billion (as at 1 January 2013). Members of the AFC provide factoring services in over 70 regions of Russia, as well as in the countries of the Customs Union and the CIS. These organisations include NFC, Promsvyazbank, Metallinvestbank, Bank Petrocommerce, Rosbank Factoring, SDM-Bank, FactorRus, Vozrozhdenie Bank, the Russian Factors Company, Credit Europe Bank, UniCredit Bank, TransCreditFactoring, Rosprombank, Belinvestbank, VTB Factoring, Alfa-Bank, and the Life Factoring Company.

The AFC is a member of the Chamber of Commerce and Industry of the Russian Federation, and a partner of SME Bank and the Association of Russian Banks. It contributes to public councils affiliated with government bodies and business associations in the fields of finance and trade. The Association is willing to consider new members, as well as to cooperate with industry associations, unions and professional communities.

The Russian Agency for Export Credit and Investment Insurance (EXIAR) was established in 2011 as an open joint-stock company. EXIAR’s mission is to support Russian high-tech exports by insuring export credits against commercial and political risks, as well as Russian investments abroad against political risks. Vnesheconombank is the sole shareholder of EXIAR. The agency's charter capital is RUB 30 billion.

NFC (the National Factoring Company):

- 14 years' experience in the factoring market

- a regional network of 22 offices in key regions of the Russian Federation

- the most comprehensive product range in Russia (accounts receivable financing, accounts receivable purchasing, indemnity against non-payment from buyers, procurement financing, financing of execution of orders, factoring for exports)

- a risk management system certified by PricewaterhouseCoopers as complying with international standards

- credit controllers in each representative office of NFC, working daily to ensure timely payment by purchasers, as well as to support factoring operations (electronic document management and educating customers about all processes and procedures, from establishing purchaser limits, to working with accounts receivable to ensure timely receipt of payments)

- a member of the two largest international factoring associations: the International Factors Group (IFG) and Factors Chain International (FCI)


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