GlossaryAgreement
A credit agreement or limit is a maximum amount guaranteed by a credit insurer or factor in the event of non-payment or unpaid debt of a purchaser.
Broker
A broker or a brokerage firm is an intermediary that intervenes on behalf of a company (or an individual) on a specific subject. A broker must find the best product at the best price. It has an extremely important role as an adviser to its customer. The broker is independent vis-à-vis insurers and factors.
Globalia Conseil is a broker specialised in credit insurance and factoring.
Claim
All of the invoices owed by the purchaser. To qualify for compensation, a claim must be certain implying that disputed claims are excluded.
Compensation
Amount paid by the credit insurer or the factor to its customer in the event of non-payment by one of the customer’s purchasers.
Covenant
A covenant or safeguard clause is a ratio fixed by the financial partners of companies, bankers or factors, which must be observed in order to avoid an immediate renegotiation of the bank loan or line of credit granted by the factor.
Globalia Conseil is a broker specialised in factoring.
Credit Insurance
Credit insurance is designed for Business-to-Business or B-to-B companies.
Credit insurance enables a company – regardless of its size – to be compensated in the event of non-payment by one of its customers. Credit insurance also enables a company to access bank financing more easily but above all via a factoring contract.
Globalia Conseil is a broker specialised in credit insurance.
Credit Insurer
A credit insurer is an insurance company that covers companies against the risk of non-payment by its customers. The customers must be companies; credit insurance does not apply to risks associated with individuals. The credit insurer pays compensation in the event of declared insolvency (that is to say, compulsory receivership, compulsory liquidation or safeguard procedure) or presumed insolvency (non-payment associated with a cash-flow problem).
Globalia Conseil is a broker specialised in credit insurance.
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Credit limit
A credit limit or agreement is a maximum amount guaranteed by an insurer or factor in the event of non-payment or unpaid debt of a purchaser.
Export credit insurance
Export credit insurance enables a company – regardless of its size – to be compensated in the event of non-payment by one of its customers. Export credit insurance also enables a company to access bank financing more easily but above all via a factoring contract. The intervention of credit insurers is not limited solely to the OECD zone. They also insure export invoices from customers outside the OECD zone.
Globalia Conseil is a broker specialised in export credit insurance.
Factor
A factor is a company that finances companies’ customer receivables in advance, that is to say prior to the invoice due date.
Globalia Conseil is a broker specialised in factoring.
Factoring
Factoring is a short-term financing technique for companies, which facilitates the resolution of cash-flow problems. Financing is obtained by a factoring company or factor that also assumes responsibility for the risk of unpaid customer debts but also recovery. Factoring does not finance claims against individuals. It therefore only concerns Business-to-Business or B-to-B companies.
Globalia Conseil is a broker specialised in factoring.
Financial information
Financial information is the act of obtaining all legal data published by a company.
Fixed price credit insurance
Fixed price credit insurance enables a very small company or micro-business to benefit from an “all included” credit insurance contract. Irrespective of the company’s activity, this package covers the recovery costs and the guarantee against unpaid customer debts. These packages vary according to the amount of turnover entrusted to the credit insurer.
Globalia Conseil is a broker specialised in fixed price credit insurance.
Fixed price factoring
Fixed price factoring enables a very small company or micro-businesses to benefit from an “all included” factoring contract. Irrespective of the company’s activity, this package covers management costs and the guarantee against unpaid customer debts.
Globalia Conseil is a broker specialised in fixed price factoring.
International factoring
International factoring enables a company to finance its Working Capital Requirements (WCR), by financing its export invoices. Financing export invoices responds to cash-flow needs. The intervention of factors is not limited solely to the OECD zone. They also finance export invoices from customers outside the OECD zone.
Globalia Conseil is a broker specialised in international factoring.
Law on the Modernisation of the Economy
Law No. 2008-776 of 4 August 2008 on the Modernisation of the Economy (LME) is based on some of the proposals in the report by the commission pour la libération de la croissance française [commission on releasing French growth potential], presided over by Jacques Attali. The law on the modernisation of the economy of 4 August 2008 (Articles 21 et seq.) sets the payment deadline agreed by the companies at forty-five days end of the month, or sixty days from the date the invoice was issued. This rule applies to contracts entered into since 1st January 2009, in accordance with Article L441-6 of the French Commercial Code.
LBO
LBO or Leveraged Buy-Out is a technique for buying a company by leveraging. The principle consists in buying out a part of the company through bank or bond indebtedness which makes it possible to increase the return on the Equity. Repayment is then made by deducting a portion of the Turnover.
Companies under an LBO need factoring in order to finance the Working Capital Requirements (WCR).
Globalia Conseil is a broker specialised in factoring.
LME
Abbreviation of the Law on the Modernisation of the Economy.
Non-notification factoring
Non-notification factoring enables a company to obtain financing without changing its existing invoicing process in any way. This product is designed for companies with a turnover of several million euros and a genuine credit management department.
Globalia Conseil is a broker specialised in non-notification factoring.
Off-balance sheet credit insurance
As the purpose of credit insurance linked to a factoring contract is the off-balance sheet financing of all or some of the accounts receivable, it enables a company – regardless of its size – to be compensated in the event of non-payment by one of its customers.
Globalia Conseil is a broker specialised in off-balance sheet credit insurance.
Off-balance sheet factoring
Off-balance sheet factoring contributes to reducing WCR (Working Capital Requirements). It is a short-term financing technique to remove all or some of the accounts receivable from a company’s assets.
Globalia Conseil is a broker specialised in off-balance sheet factoring.
Outstanding balances
In terms of credit insurance, a claim corresponds to the invoices that are due as well as the invoices that are not yet due, to be paid by the purchaser.
Outstanding Balance Factoring
Outstanding balance factoring allows you to finance on a regular basis (every month for example) a large number of invoices. Outstanding balance factoring finances the stock of your current outstanding balances.
Globalia Conseil is a broker specialised in outstanding balance factoring.
Recovery
The recovery of a claim consists in using various legal, amicable or judicial methods to obtain the payment of a debt from a debtor.
Reduction in Working Capital Requirements
In recent years, reducing Working Capital Requirements (WCR) has become one of the major objectives of listed companies or companies that have been bought out through an LBO. There are three areas of work to reduce Working Capital Requirements: reduce inventories, reduce the deadlines agreed with customers or those agreed with suppliers. For listed companies, the benefit lies in improving the presentation of the balance sheet by removing the customer receivables from it and by therefore taking action on the customer deadlines. For companies under an LBO, it is about retaining financing conditions while complying with the ratios and covenants set by the bankers. Again, in order to achieve this, removing the customer receivables from the balance sheet is an extremely effective technique. The ideal set-up is to combine off-balance sheet credit insurance and off-balance sheet factoring.
Globalia Conseil is a broker specialised in reducing Working Capital Requirements through off-balance sheet credit insurance and off-balance sheet factoring.
Reverse factoring
Reverse factoring or supply chain financing is a factoring technique on the customer’s initiative for its suppliers. Usually, factoring makes it possible to finance its customer receivables. When a company enters into a reverse factoring contract, it enables its suppliers to finance the claims that they have against it easily and quickly.
Globalia Conseil is a broker specialised in reverse factoring.
Short-term financing
Short-term financing groups together several types of financing: Bank overdraft, “Dailly” assignment, discount, Mobilisation of Claims Arising Abroad (MCNE) and factoring.
SME credit insurance
SME credit insurance is designed for Business-to-Business or B-to-B companies.
SME credit insurance enables a company – regardless of its size – to be compensated in the event of non-payment by one of its customers. SME credit insurance also enables a company to access bank financing more easily but above all via a factoring contract.
Globalia Conseil is a broker specialised in SME credit insurance.
SME factoring
SME factoring enables a company to finance its Working Capital Requirements (WCR), by financing customer invoices. Financing customer invoices responds to cash-flow needs.
Globalia Conseil is a broker specialised in SME factoring.
Unpaid debt
An unpaid debt is one or more invoices not paid by a purchaser.
Working Capital Requirements
The Working Capital Requirement is made up of elements associated with the company’s operating cycle, i.e. anything to do with the inventories and the credit facilities granted to customers and suppliers.
Globalia Conseil is a broker specialised in reducing Working Capital Requirements through the factoring technique.
