SmartFact: Particularly smart factoring

October 2021 – Now that the COVID-19 pandemic is abating in many corners of the world, global trade is starting to flourish again: But given the economic uncertainties and some currency turbulence, German commercial enterprises should play it safe where financing is concerned. The “SmartFact” product offering from Hamburg Commercial Bank offers valuable assistance with this.

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If one thing is definitely certain, it’s that nothing is certain any longer. If it wasn’t obvious before, the outbreak of the COVID-19 crisis in spring 2020 and the subsequent sudden crash of the real economy around the globe showed how fragile many supply chains were up to that point. The accident involving the giant container ship “Ever Given” in the Suez Canal in the spring of this year provided further, very vivid confirmation of the suspicion that the stability of supply chains is far from being able to keep pace with the speed of globalization.

Trade: The fear of impending payment delays or even defaults

There will never be 100% certainty in commercial life. Risks lie in wait wherever opportunities are on offer. German commercial enterprises who have been doing business successfully around the world for years or even decades know all about this. But they also know that certain risks, which cannot be excluded completely, can at least be minimized to a large extent. Not least, such risks include faltering or even entirely absent payments from customers abroad. Such a circumstance can cause liquidity bottlenecks for many small and medium-sized enterprises if they themselves expend money and deliver the goods – but then are not recompensed for this adequately or within a tolerable timeframe.

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Factoring: Turning future receivables into immediate funds

In such cases, assistance can be provided by means of the sale of receivables through factoring. The basic idea is that commercial enterprises receive cash immediately from the factoring company and accept a specific clear deduction in return, which is paid out again when the buyer subsequently settles the debt. This ensures that companies remain solvent at all times, can use the income to finance new business, protect their balance sheets, and save themselves some bridging loans. In the shape of “SmartFact,” Hamburg Commercial Bank can offer its customers a particularly sophisticated product. It can be used for all commercial transactions involving individual receivables or receivables pools with a volume in excess of ten million euros or U.S. dollars and with terms from one year. Browser-based management enables extremely convenient handling for customers.

Advance financing for payment periods of up to 180 days

One of the most recent deals to be concluded was for BdV Behrens GmbH from Hamburg. This owner-managed SME is increasingly trading in Central and Latin America in the chemical, food, and pharmaceuticals industries on the basis of U.S. dollars. Due to the immense delivery distances alone, payment periods are longer than average at up to 180 days. “Our customer had increased financing requirements thanks to positive business and sales prospects. Factoring is the ideal instrument for such growth periods to ensure the company retains enough working capital,” says Jan Schubert, a factoring specialist at Hamburg Commercial Bank.

Like many commercial enterprises, in order to ensure sufficient working capital, BdV Behrens requires both receivables financing and enough capital to purchase goods and make the required down payments. In this case, the latter was partially funded by other banks to date, meaning that the “SmartFact” offering had to be incorporated in coordination with this group of financers.

What we appreciate about factoring via Smart Fact is the possibility of being able to generate liquidity for new business at very short notice on the basis of our complex and diversified receivables portfolio, in parallel with conventional financing," says Christoph Marquardt, Managing Director of BdV Behrens. And adds: "The practical handling in day-to-day business, the timely processing of all transactions and the possibility of flexible, individual adjustments of the program to our needs give us additional leeway.

Jan Schubert and his colleagues are particularly proud of three things: “First, we were able to purchase receivables in U.S. dollars and euros from more than 40 countries in export markets of relevance for BdV Behrens. Second, the associated payment transactions were handled from a single source and third, payment was on time despite the COVID-19 crisis and the various lockdowns in all parts of the world.”

Would you like further information on this subject? We would be happy to advise you.

André Niewels

Senior Vice President

Phone: 040 3333-10410
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