What is export factoring?
The sale of an export invoice to a factor, which pays you an advance when the goods are shipped and collects the full amount from your foreign buyer at maturity. With credit insurance, the buyer’s risk of non-payment is covered.
Is it a loan?
No. The factor buys your receivable. You do not borrow, and no new debt appears on your balance sheet: an invoice is replaced by cash.
Do I need a bank guarantee or collateral?
No. The security is the insured invoice. The credit insurer covers the buyer’s risk within the limit it approves.
Who are your partners?
A European factoring operator with thirty years of experience, and a AAA-rated European credit insurer. LTS is the Lebanese broker that prepares and coordinates each transaction.
Which buyers can be financed?
Only buyers that the credit insurer accepts and agrees to cover. Each buyer is submitted to the insurer, which sets a limit on it; LTS discounts invoices only on approved buyers, within that limit.
How much is advanced?
Typically 80% of the value of each approved invoice is paid on assignment; the balance follows when the buyer pays the factor, less fees. The exact percentage is set in the factoring agreement.
What does it cost?
A financing charge for the days the advance is outstanding, a factoring commission, the credit insurance premium and an LTS brokerage fee. In our illustrative example of a USD 100,000 invoice at 90 days, the total is USD 4,150, or 4.15% of the sale. You receive a full quotation before you commit.
Is the discount an interest rate? Should I multiply it by four?
No. An annual rate is the price of capital lent for a period; the discount is the price of turning one sale into cash on shipment with the buyer's risk insured. If you annualise the cost, annualise the return as well: the capital released finances more orders in the year. And under IFRS 9 the discount on a receivable sold without recourse is a loss on its sale, not interest expense.
Is it with or without recourse?
The buyer's risk of non-payment is covered by credit insurance in favour of the factor, within the limit approved for that buyer and under the terms of the policy. Your own obligations remain those of a seller: genuine goods, delivered as invoiced.
What do I get besides the cash?
An assessment of your buyer before you ship, insurance of the buyer's risk, and the collection of the invoice abroad by an experienced European factor.
What happens if my buyer does not pay?
The claim is handled under the credit insurance policy, within the limit approved for that buyer and under the terms of the policy.
How long does it take to start?
Typically a few weeks for the first buyer: the assessment of your company, the insurer’s approval of the buyer and the signing of the agreements. Later shipments to approved buyers are financed routinely.
Do my buyers know?
Yes. Your buyer is notified that the invoice is payable to the factor’s account. This is standard practice in international trade.
How do I start?
Send us a short enquiry with your goods, buyers and payment terms. No documents are needed at this stage.