Factoring

B)

1.) Factoring has grown because the customers have become used to it, because it can be done on a confidential basis and because factors (who are often banks nowadays) are losing the image of lenders of a last resort.

2.) The factor doesn't pay for at least 40% of the amount of the invoice (as long as the bill is not paid).

3.) In this case it is somebody who gives a troubled businessman money under circumstances in which nobody else gives him any more money.

4.) The customers might suspect that the company using a factor is in financial difficulties. The indiscretion/breach of confidence of giving away the invoice claims and bad estimation of the end-customer might be harmful to the relations between the companies.

5.) Banks and textile industry play an important role in factoring in Britain.

6.) The bank usually judges its clients only based on material from balance sheets. On the other hand the factor considers the unpaid invoices as well as the flow of invoices and payment cheques.

7.) The 3 advantages of using a factor are:

• no expends and trouble for the own sales accounts department
• salesmen don't have to cloud customer relationships by reminding them about previous, unpaid bills.
• company doesn't have to wait for the customers to pay their bills.

8.) Their jobs are safer and they don't have to remind their customers all the time to pay the invoices.

9.) The firm can use the money from the factor to finance work in progress and new orders or investments.

10.) The main difficulty is that it can't raise overdraft finance from its bank to fund further growth. This means that the credit offered to a customer usually can't be extended which forces the businessman to turn away orders.

11.) The mistakes of banks are that the judgement of the firm is based only on balance sheets and accounts which are up to 18 months old and who don't show the recent influx of orders.

F)

1.) The company is underfinanced which means that it can't process all the work in progress, the new orders (it would like to process) and can't make any investments.

2:) The customer might be in financial difficulties and his bank might not give him enough money to pay all his bills. Possibly he might just want to save interest which he would have to pay for his debts, he might just have forgot to pay the invoice or he might have objections to the quality of the merchandise.

3.) Methods to finance expansion:

• bank credit: fixed limit, judgement based on old numbers.
• factoring: only 60% of invoice amount, unpaid invoices are considered
• selling shares
• win another (sleeping, secret) partner or make one partner increase his deposit
• increase prices to make more profit

4.) Ways of purchasing

• cash downpayment: immediately paid, robbery(?)
• invoice/payment cheque: take 10 - 30 days, 3% discount
• cash on delivery (C.O.D): payment on receipt of parcel/merchandise.
• barter: exchange with other goods/services

Translate

1. Mr. White cannot solve his problems by (taking up loans|applying for a loan) from several banks.
2. He couldn't even pay the interest [rates] of 136 pounds.
3. According to (statements|the opinion of) financial experts more than 15% of younger people have such problems.
4. Why? Because they want to have everything even if they have to (accumulate debts|get more and more indebted).
5. Today you can get anything without having to pay much money at a time.
6. Anyone can make (small|minor) downpayment or a small sum monthly to be able to drive to work in an expensive car.
7. Sometimes people don't think about what would happen if by a divorce or (unemployment|because of a lay-off) they get into a financial crisis.