OREANDA-NEWS. On July 09, 2008 The EBRD, supported by donor funding from the Italian government, has hosted two seminars in Belgrade and Podgorica, advising financial institutions interested in starting or increasing factoring operations. Similar seminars are planned later this year also in other EBRD countries of operation in South-East Europe and the CIS in which factoring is still widely unknown, reported the press-centre of EBRD.

Factoring, which is the activity of purchasing, administering and collecting short-term accounts receivable by a financial institution, is a fast and flexible method of improving a company’s cash flow and providing working capital for the company. With factoring, companies have immediate access to cash that is normally tied up for 30, 60 or 90 days in accounts receivable invoices. With the use of factoring services, a business can take advantage of growth opportunities, reduce debt and solve problems associated with the collection of the accounts receivable.

The EBRD has included factoring as a new product under its Trade Facilitation Programme (TFP) in order to further transfer know-how and innovative trade finance solutions to its countries of operations. Through the TFP, the EBRD also provides guarantees to international confirming banks and factoring companies, taking the political and commercial payment risk of international trade transactions financed by issuing banks and factoring companies in the countries of operations.

In addition, the EBRD grants short-term loan facilities to banks and factoring companies for the purpose of funding sub-loans to their clients.

The seminars in Belgrade and Podgorica gathered over 25 representatives of banks, factoring companies and export credit agencies from Croatia, Montenegro and Serbia.

Silvio Fasola, an EBRD consultant in international factoring, said: “It was certainly useful to provide a complete overview about factoring and the various stages that one must go through in the establishment and organisation of a factoring unit, be it a separate company or division of a bank, but a number of banks expect or would like to receive additional support also in the future, possibly in form of operational assistance over a period of time.”

One of the participants, Ms. Jasminka Grabovac, Documentary Business and Guarantees Specialist of ProCredit Bank, Serbia, added: “Due to lack of information about factoring in practice as well as numerous questions with regard to the legislation for factoring business in our country, this seminar has helped us to better understand this kind of financial services. As an expert in this kind of business, Mr. Fasola, informed us how factoring has been used by other banks and factoring companies in our region. He explained to us how it works in practice, with lots of case studies, providing us with tools and good advice for better utilisation of this trade finance product.”

Launched in 1999, the EBRD’s Trade Facilitation Programme (TFP) supports trade to, from and within South-Eastern Europe and the CIS. The programme enables participating banks and factoring companies in developing regions to provide their clients with trade finance and grants local companies the required support to increase international trade.

As of July 2008, TFP has facilitated more than 7,000 trade deals worth EUR4,3 billion, including 463 trade finance transactions in Serbia and Montenegro worth EUR50 million. In addition, the EBRD has organised more than 40 training courses and advisory services projects for trade finance and factoring staff of more than 100 financial institutions in 18 EBRD countries of operation in South-east Europe and the CIS.