MMC assists companies and institutions in defining their funding and supply-chain finance strategies.
The term Supply Chain Finance identifies a mix of models, solutions and services aimed at optimizing financial performance and controlling Working Capital, exploiting in-depth knowledge of Supply Chain relationships.
Among these is included:
- Commercial invoices discounting;
- Factoring.
Commercial invoices discounting
With MMC, through the platforms owned by our fintech partners, it is possible to sell commercial invoices online, quickly and in total security, obtaining liquidity to support the development of your company. Thanks to the competitive advantage offered, invoices are uploaded with just a few simple steps and tomorrow's liquidity is obtained today.
Supply Chain Finance tools improve and consolidate strategic relationships along the supply chain and allow the debtor to retain their suppliers, bringing advantages to all the companies that make up the supply chain.
Main advantages of the Commercial invoices discounting
- The goal is to provide concrete and immediate help to support business continuity and improve the strategic planning of companies by providing immediate liquidity;
- Greater possibility of mitigating the risk that the debtor does not pay;
- Greater efficiency deriving from the delegation of collection management.
These advantages are those that correspond to the mitigation of three of the main risks of finance:
- liquidity risk;
- debtor insolvency risk;
- operational risk (for example errors in managing invoices) and relational risks (for example due to supplier delays).
Factoring
Factoring is a type of contract that allows companies to assign their credits to third parties, obtaining their nominal value immediately or upon expiry, net of the purchase, sale and management costs. The acquiring financial company is called a factor.
The assignment of credits can take place in two different ways:
- With recourse which leaves the customer with the risk of any insolvency of the assigned debts;
- Without recourse with which the factor assumes the risk of insolvency of the assigned debts.
There are also different types of services:
- Full factoring which provides for the purchase by the factor of trade receivables on an ongoing basis under pre-established conditions;
- Maturity factoring in which the factor's activity is carried out solely in the management of the company's receivables while the assignor does not receive any financing;
- Credit-cash factoring in which the factoring company advances the customer the value of the trade receivables assigned;
- International Factoring, on the other hand, is aimed at customers and debtors from different countries.
Main advantages of factoring
The main advantages of factoring are speed and safety in the timing of disbursement of funds, guarantee of the successful conclusion of the company's credits and contribution to credit management.
From a financial point of view, in particular, factoring allows you to optimize the planning of collections. Other functions performed by factoring from a financial point of view are the coverage of funding needs (particularly for smaller companies), both temporary and chronic, and support for the growth of turnover.
However, factoring is a service with a high degree of customization, in relation to characteristics and needs.
Cost of factoring
There are two main cost orders of factoring:
- The financial cost (interest), relating to the loan implicit in the payment of the credit before the due date;
- The administrative cost (commission), relating to the management and possibly to the guarantee of credit completion; the commission depends on the type of services offered and on the characteristics (maturities, amounts, etc.) of the credits transferred.
Who can carry out the factoring activity
The factoring activity can be exercised by a bank or a financial intermediary and have as its corporate purpose the exercise of the purchase of business receivables. Factoring companies must be set up in the form of joint-stock companies, limited partnerships by share, limited liability companies or cooperatives, they must have paid-up capital of no less than 5 times the minimum capital envisaged for the establishment of joint-stock companies and are subject to the discipline of the art. 108 and 109 of the TUB which require the possession of the integrity requirements of the participants in the share capital of the company that carries out the financial activity, as well as the integrity and professionalism requirements of the subjects who manage the company with this corporate purpose.