WHAT IS FACTORING

Factoring is a financial transaction when a company sells its short-term receivables in the country or abroad to a financial institution (bank or factoring company) for a certain discount and uses the cash it receives in exchange for financing the business.

Key conditions:

1. Products/services must be delivered
2. Invoices subject to factoring must not be overdue, pledged or transferred to a third party

FACTORABLE SECTORS

BACKGROUND

SME managers in North Macedonia often lack the knowledge of efficient financial management needed to move the company forward and be competitive in the modern market economy. By applying targeted training SMEs will have improved understanding of factoring as a financial tool that can generate immediate and affordable liquidity and increase sales and revenue of the companies.

The activity is intended to improve the financial management knowledge and practice of key decision makers (owners, directors, financial officers etc.) which have been cited as one of the top three impediments to SME growth in the region. Factoring as a financial product
requires SME’s managers to have adequate knowledge of efficient financial management and how to properly utilize factoring. Another key impediment for SMEs is preparing adequate documentation to secure the financial transaction.

TARGET AUDIENCE

Finance consultants working with SMEs in regards of insuring most appropriate finance for them. Constants with CMC Certificate are preferable and encouraged to apply.

GOALS

The goal of this activity is to increase access to factoring as source of finance for SMEs and their financial management knowledge by providing consulting services to individual companies which will result in increased number of factoring applications, and the volume of
factoring transactions.

OUTCOMES

This incentive will have multiple benefits. The first phase of submitting the application will cover the consultant's costs for training and preparation of the application itself and motivates him/her to begin offering factoring as a financial instrument. Second, the compensation for approved application will motivate the consultant to further promote factoring in the future, and third, the award for the motivation of portfolio financing is in the direction of offering a service that follows the current trends in the factoring industry.

The general idea of the project is to offer to companies the first appropriate individual factoring training that will result in the preparation of an application and eventual closure of the transaction with the end goal to motivate financial service providers to specialize in offering factoring as a source of funding.

THE APPLICATION PROCESS:

Step 1: The financial service provider works directly with a company. The result will be that company applies for factoring. After receiving the application, the financial institution (factoring company or bank) will review if the SME (applicant) is factorable. The financial institution will then inform the project that the selective consultant developed and presented factorable application and the project will compensate the consultant with $100.

Step 2: If the factoring application from step 1 has been approved by the financial institution and the financial institution has informed the project that the application has been approved and of the agreed factoring turnover (invoice value) of the factoring application the project
will pay a success fee of additional $600.

Step 3: After the financial institution notifies the project that the selected and approved application is not just single invoice finance, but their collaboration with the company has expanded into more invoices or portfolio buyers, the project will pay the approved and selected consultant an additional $100 as a success fee.

 

REQUIRED DOCUMENTS TO APPLY

If you are a consultant company or individual consultant the following documents are required in order to submit your application for consideration, review and possible approval:

А) Consultant Companies

• Copy of registration certificate
• CVs of consultants
• [optional] Company profile
• [optional] Narrative on specialization by service types and sectors
• [optional] References

B) Individual Consultants

• Consultants CV and ID
• [optional] References for the consultant from SMEs with they previously worked together
• [optional] reference from work with other Donor Projects
• [optional] Narrative on specialization by service types and sectors
• [optional] Relevant Certificates

*We reserve the right to reject any and all applications or withdraw previously accepted application and or applicants that are deemed in breach the set standards*