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Working with industry leading organisations, experts, governments and universities, BCR Publications delivers expertise in factoring, receivables and supply chain finance to a global audience.
BCR has long been a beacon of innovation and excellence in the realm of receivables finance, playing an instrumental role in shaping the industry’s international landscape. Through its comprehensive conferences, insightful publications, and thought leadership, BCR has facilitated crucial dialogues and connections among industry professionals, driving forward the development of receivables finance globally.
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Ask the treasuryXL expert #5 What is Factoring in Trade Finance?
03-11-2022 | treasuryXL | Wim Kok | LinkedIn |
treasuryXL is the community platform for everyone with a treasury question or answer! A common question asked by treasurers is what Factoring means in Trade Finance. In today’s article Ask the treasuryXL Expert, Wim Kok defines factoring in trade finance for us.
Question: “What is Factoring in Trade Finance?”
Answer provided by Wim
What is Factoring in Trade Finance?
Well, there is a pretty good definition included in the Standard Definitions for Techniques of Supply Chain Finance, prepared by the Global Supply Chain Finance Forum and published by the ICC in 2016. It is currently being updated, but the definition is still alright.
There they give the definition of factoring in trade finance as: Factoring is a form of Receivables Purchase, in which sellers of goods and services sell their receivables (represented by outstanding invoices) at a discount to a finance provider (commonly known as the ‘factor’). A key differentiator of Factoring is that typically the finance provider becomes responsible for managing the debtor portfolio and collecting the payment of the underlying receivables.
Would you add anything to this definition?
There are a number of things I would add to this to explain the terminology and make it more clear:
I trust this will be helpful and give more insight into this subject.
Wim Kok
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MENA Investment Banking Review First Nine Months 2022
02-11-2022 | treasuryXL | Refinitiv | LinkedIn |
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Interview | 8 questions for Konstantin Khorev, Seasoned Treasury Professional
01-11-2022 | treasuryXL | Konstantin Khorev | LinkedIn |
Meet our newest expert for the treasuryXL community, Konstantin Khorev.
Konstantin has 18+ years of experience in corporate treasury, gained in various environments: from public companies with +100BUSD turnover, to PE and privately owned companies, as well as at a prominent treasury consulting firm.
Being exposed to a wide range of different challenges and projects, Konstantin has built a strong expertise in the full spectrum of treasury and risk activities and in cross-functional collaboration and treasury partnership with business operations, tax, accounting, audit, and internal control.
Konstantin holds a Ph.D. degree in financial mathematics and is a CFA charter holder since 2009.
We asked Konstantin 8 questions, let’s go!
INTERVIEW
1. How did your treasury journey start?
In 2005 I changed my career path from investment management to corporate finance with a leading oil major. Couple of years later, being already a professional with several years of experience in related areas, I decided to join the treasury department within the same company. I made my decision mainly because of a great team and a lot of challenging projects there – we basically were requested to bring best practices into treasury function in multinational corporation with +100BUSD turnover. The first project was setting up an international multicurrency cash pool structure.
2. What do you like about working in Treasury?
Cross-functional collaboration (business, accounting, FP&A, tax), possibility to implement projects that make structural changes, e.g. in how company manages cash and financial risks, make payments, automate processes, etc.
3. What is your Treasury Expertise and what expertise gives you a boost of energy?
Change and project management, setting up a function from scratch or bringing best treasury practices, with special personal interest in the area of automation and data analysis. Having my first background in mathematics and computer science I also like to develop my own IT solutions (python, VBA, SAP scripting) that can solve certain automation or data problems and thus bridge a gap between client’s needs and available market solutions. Observing the professional growth of team members, I am coaching or used to coach is also a big source of excitement to me.
4. What has been your best experience in your treasury career until today?
I would say I can not highlight one single project. I enjoy and I am proud of every moment when I see the change realized, or cost-reduction/value-added created.
5. What has been your biggest challenge in treasury?
Setting up supply chain financing in a country where our team and company have been among pioneers implementing the product. Apart from tax, legal, accounting challenges related to the jurisdiction, as well as bank negotiation it required a lot of effort to explain the benefits and persuade all the stakeholders (from CFO to supply managers and suppliers). The ultimate result was more than rewarding: win-win solution both for the company decreasing working capital needs by 50% and for the suppliers getting access to much cheaper (and sometimes even unavailable at all) bank financing.
6. What’s the most important lesson that you’ve learned as a treasurer?
Invest time explaining what treasury is about and why certain things are crucial for internal counterparties.
7. How have you seen the role of Corporate Treasury evolve over the years?
Playing bigger and bigger role as a business partner to other functions. Embedding more opportunities that are provided by IT solutions.
8. What developments do you expect in corporate treasury in the near and further future?
Automation and machine learning to play more role in daily and later strategical treasury operations. Distributed Ledger Technology (blockchain is an example) still to show its full potential. Fintech companies substituting banks in more areas and having bigger market size.
Want to connect with Konstantin? Click here
Thanks for reading!
Kendra Keydeniers
Director Community & Partners, treasuryXL