Factoring: an effective liquidity instrument for companies | News
Companies have been experiencing problems to meet their obligations in the short term, both due to isolation and the state of health emergency that we have been experiencing since March 2020. In view of this, companies seek to be able to “monetize” or convert their sales into cash .
Before they had the bills (or another financial instrument such as promissory notes or account advances), as a vehicle to make a discount at a financial institution.
In this regard, Edmundo Lizarzaburu, professor of Administration and Finance at ESAN University, explains that factoring has been available for a few years, a negotiable invoice discount that reduces the time to access liquidity.
This is due to the fact that the acceptor does not sign a letter, but the invoice that enters the financial institution is sent to Cavali | Factrack (centralized registry of negotiable invoices), which thanks to Law 29623, allows said company the possibility of generating confirmations to the companies of the acceptance or not of the discount of the negotiable invoice.
“The requirement of financial entities, which can be banks, Stock Brokers (SAB), factoring companies, among others; is that they must be participants in Cavali. The financing of the negotiable invoice is an attractive instrument, because when financing the sale, the credit risk is focused on the acceptor of the invoice (the buyer) and not necessarily on the debtor (the drawer) ”, explained the specialist.
He also added that the volume of negotiation of invoices has grown significantly and that it has allowed companies to obtain various sources of financing, as well as various costs.
For this reason, the important thing is to evaluate the financial cost, which will be related to the credit rating of the drawer. That is why maintaining order in the finances of companies is key to being able to access various financial instruments that make it possible to cover potential deficits in cash flow.
The ESAN University professor said that another important aspect to consider and that is more related to operational risks, is related to accounting and tax flow.
“For example, how to identify and mitigate the presentation or deduction of advanced invoices that could soon be canceled and / or” netted “with credit notes (within the following month or month) or that, in the use of the discounted resource a provision, reserve or projection of the payment of the rent or IGV is not made by the company (product of the sale carried out), which as issuers can generate contingencies against the tax regulator, Sunat ”, he said.
Finally, Lizarzaburu indicated that every financial instrument has benefits and risks, but the important thing is to analyze it before making a decision, both for the entity that finances the operation (credit, credit and collection risk), the issuer of the invoice ( operational, reputational and credit risk) and the acceptor (liquidity and reputational risk).
“It will always be necessary to carry out a random audit in a preventive manner to mitigate the aforementioned risks,” he said.
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