VIETCOMBANK FACTORING

 

 

Who benefits from factoring?

Ø        Sellers/Exporters offering credit terms up to 180 days

Ø        Buyers/Importers buying on credit terms up to 180 days

 

Benefits of factoring

To sellers/exporters:

§          Ability to offer open account terms to customers

§          Buyers/Importers’ creditability assessment

§          Finance against receivables

§          Reduction on operating expenses and time consumed on collecting receivables

§          Protection against Buyers/Importers’ default in payment

To buyers/importers:

·          No L/Cs, no deposits needed

·          Ability to buy on open account terms

·          Payment made only when merchandise’s requirements are met

·          No factoring fees

 

Forms and Applications

If you are interested in our services and would like to establish a factoring credit line, complete the forms listed below and send to:

Corporate Banking Department of the nearest VCB branch, or

Factoring Division – VCB Head office

10th floor – VCB Tower

198 Tran Quang Khai Ave.

Hoan Kiem, Hanoi

Tel: 84.4. 9365321

Application forms (for sellers/exporters and for buyers/importers)

 

Frequently Asked Questions

1. What is factoring?

Factoring is an agreement between VCB and the seller/exporter in which the seller/exporter assigns to VCB his receivables arising from contracts of sale of goods between he and his customers (buyers/importers) and VCB is to perform at least two of the following functions:

-     Ledger maintenance

-     Finance, including loans and advance payments

-     Collection of receivables

-     Protection against Buyers/Importers' default in payment

Domestic factoring: factoring based on the contract in which the buyer and the seller are the residents as stipulated by Vietnam laws.

Export- Import factoring: factoring based on the Export- Import contract.

2. Which receivables should be factored?

Receivables which should be factored include those arising from sales on credit terms up to 180 days. Excluded are:

§         Receivables arised from sales based on L/C or CAD (cash against documents), or any kind of sales for cash.

§         Receivables arised from illegal contracts.

§         Disputed receivables.

§         Receivables arised from consignment sales.

§         Receivables which have remaining payment period more than 180 days.

§         Collateral or mortaged receivables.

§         Overdue receivables.

3. Can we use factoring if we carry on using D/A?

Absolutely you can. Many Sellers/Exporters are doing it. It is especially useful in markets where open account terms are not commonly used. The administration are relatively simple and the financing and risk coverage are not affected.

4. What is the cost of factoring?

General principles:

Sellers/Exporters pay two basic charges: commission charge and interest charge.  

-    Commission charge is quoted as percentage over the total volume of factored receivables, including administration fee, handling fee, collection fee and credit risk protection fee.

-    Interest charge is collected monthly and calculated on the advance amount from the withdrawal date to the write-off date.

Buyers/Importers pay nil.

Facts:

VCB is offering special discounts on commission and interest charges for sellers/exporters. Please click in order to view our Charges and interest rates for VCB factoring.

5. How does factoring operate?

Domestic factoring

Preliminary negotiations

The Seller comes to VCB to request for factoring. After assessing the Seller's and Buyer’s Factoring Files, VCB and the Seller sign a factoring agreement. The Seller then informs his Buyers about the factoring agreement signed with VCB. The Buyers will sign Payment Commitment which shall be verified by VCB.


 Transaction steps

  

 

 

 

 

 

 

 

  1. The Seller delivers goods to the Buyer.
  2. The Seller assigns his invoices to VCB (in accordance with his factoring agreement signed with VCB).
  3. VCB makes the agreed financial advance against approved invoices to the Seller.
  4. VCB collects the outstanding invoices in accordance with the sales contract existing between the Seller and the Buyer.
  5. The Buyer pays to VCB.
  6. VCB then settles the pre-payment by remitting the remainder to the Seller less the agreed charges.

Export Factoring

Preliminary negotiations

The Exporter comes to VCB to request for factoring. After assessing the Exporter's Factoring Files and selecting proper import factors, VCB and the Exporter sign a factoring agreement. The Exporter then informs his Importers about the factoring agreement signed with VCB and relationship with Import Factors.

Transaction steps

 

 

 

 

 

 

 

 

 

 

  1. The Exporter delivers the goods to the Importer.
  2. The Exporter assigns his invoices to VCB (in accordance with the factoring agreement signed with VCB) for VCB to reassign them to the Import Factor.
  3. VCB makes the agreed financial advance against approved invoices to the Exporter.
  4. The Import Factor collects the outstanding invoices in accordance with the sales contract existing between the Exporter and the Importer.
  5. The Importer pays to the Import Factor, who then transfers the proceeds to VCB.
  6. VCB settles the pre-payment by remitting the remainder to the Exporter less the agreed charges.

Import Factoring

Preliminary negotiations

At the request of the Export Factor, VCB assesses the Factoring Files of the nominated Importers in Vietnam and verifies the Importer’s Payment Commitment. Importers who want to use factoring may directly contact VCB for advice and help in selecting proper Export Factors in the Exporters’ countries.

Transaction steps

  

 

 

 

 

 

 

 

 

  1. The Exporter delivers the goods to the Importer.
  2. The Exporter assigns his invoices to Export Factor (in accordance with the factoring agreement signed with Export Factor) for Export Factor to reassign them to VCB.
  3. Export Factor makes the agreed financial advance against approved invoices to the Exporter.
  4. VCB collects the outstanding invoices in accordance with the sales contract existing between the Exporter and the Importer.
  5. The Importer pays to VCB, who then transfers the proceeds to Export Factor.
  6. Export Factor settles the pre-payment by remitting the remainder to the Exporter less the agreed charges.

 

6. Why should exporters need factoring when L/C terms can provide exporters with risk protection?

L/C could certainly safeguard the Exporters. We advise that Exporters should use L/C in countries where business conditions are risky. However, Exporters will find that more and more Importers, especially those in America and Europe, deny buying on L/C terms because of its complicated and costly procedures. Therefore, if an Exporter wants to expand sales to these markets, he must be able to offer Importers more favourable terms (than L/C’s) and that means open account or at least D/A terms. Then he needs factoring for the security and finance.

7. Does VCB cover the risk of Buyer's insolvency before the goods have been shipped?

Certainly NOT. VCB only provides credit risk protection for receivables which, at the time of assignment to VCB, have arised and not yet matured. Of course until the goods have been delivered there is no receivable.

8. Why should we use VCB's factoring service?

VCB is the first class bank in Vietnam in terms of International and Domestic Settlements. Our reputation has also been acknowledged worldwide. VCB is the first in Vietnam to launch Export/Import Factoring through FCI's two-factors system. Meanwhile, VCB is also the first in Vietnam to offer the most diversified range of factoring products, adaptible to every factoring need of Vietnamese companies. Our network of branches is nationwide, which covers all big cities and industrial zones. We are proud of our professional and enthusiastic staffs. With these credentials, certainly you will be best served as a VCB Factoring Client. Our motto is "Reliable - Speedy - Friendly".

9. Which types of factoring products offered by VCB?

VCB offers a full range of factoring products, classified into three main groups as:

  • Export factoring
  • Import factoring
  • Domestic factoring

 In each of these groups, there are detailed products to meet all the diversified needs.

 Export factoring:

BASIC EXPORT: Ledger maintainance + Collection.

STANDARD EXPORT: Ledger maintainance + Collection + Finance + Credit risk protection.

PREMIUM EXPORT: Ledger maintainance + Collection + Finance.

Import factoring:

BASIC IMPORT: Ledger maintainance + Collection.

STANDARD IMPORT: Ledger maintainance + Collection + Credit risk protection.

Domestic factoring:

STANDARD DOMESTIC: Ledger maintainance + Collection + Finance + Credit risk protection.

PREMIUM DOMESTIC: Ledger maintainance + Collection + Finance.

Beside the main products as mentioned, we are willing to discuss with you in order to provide you with a special package of factoring products to serve best your particular needs.

10. Which criteria should we have in order to use VCB factoring products?

Those who want to use VCb Factoring products should be granted credit limit in VCB or bailed by a recognized financial institutions. After considering other merits such as quality of business operations, financial health, nature of the markets and goods, VCB will decide whether to offer you factoring products.

11. Which goods should be applied factoring?

Theoretically, all goods can be applied. However, the most suitable ones are consumer goods, components and raw materials.

12. We still have further questions. Where can we get the answers?

Please don’t hesitate to contact us immediately for more information and documents:

Corporate Banking Department of the nearest VCB branch, or

Factoring Division – VCB Head office

10th floor – VCB Tower, 198 Tran Quang Khai Ave, Hoan Kiem, Hanoi

Tel: 84.4. 9365321

 
Go top