Factoring for telecommunication system installation company

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Summary
UPDATE: The Company has an increased flow of orders and we are increasing factoring limit by an additional EUR 40,000. New investments will start financing invoices received from the 1st of June. We must note, that in case factoring limit would be decreased back to the original amount, these additional investments would be repaid first.
 
The Company has been operating since 2005 and offers telecommunication system installation services in Latvia. Services include process starting from design and engineering of solutions to final installation of antennas, metal structures, cables and towers. The Company is currently looking for a factoring solution in the amount of EUR 80,000 for 12 months period. Financing provided will be secured by receivables from one of the largest telecommunication services providers in Latvia. In addition, financing is secured with a personal guarantee from the owner.  The Company has excellent previous payment discipline and successfully used over EUR 1 mil. of factoring service from Capitalia. The buyers pay financed invoices directly to Capitalia bank account. Lenders are offered 12 % annual interest rate with principal repayment at the end of the term. It should be noted, that the annual interest rate in the current risk class is higher than usual due to the new financing product and current economic situation.

There is a number of factors that make lending to the Company an attractive opportunity and the main highlights are the following:
  • The owner has more than 15-year experience in managing the Company and in  telecommunication installation business;
  • The Company's client portfolio consists of big stable companies, including Latvijas Mobilais Telefons and Latnet;
  • The financing is secured with a personal guarantee of the owner and is backed by issued invoices;
  • The Buyers pay for financed invoices directly to Capitalia account;
  • Excellent previous payment discipline with EUR 1 million used factoring financing and EUR 121,000 fully repaid loans from Capitalia.

Financing product
The duration of a factoring contract is 1 year and we seek financing for the full approved credit limit. If the credit limit is regularly not used up by the client, we would reduce the financed amount by returning money proportionally to the investors. Alternatively, if the client would seek an increase of credit limit, we will offer to invest additional capital. 
 
Further notes about interest calculations:
A)  Interest will be paid every month until the 5th day for the interest charged in the previous period. Under the factoring contract Capitalia charges interest upfront for the entire period of the financed invoice;
B)  There can be gaps of a few days between invoice repayment and new invoice placement hence the actual return might be lower than the interest rate mentioned in the Summary section.
 
ID 65-2011-11
Industry Telecommunication installation
Location Latvia
Loan type Invoice purchasing
Term 12
Expected return 12%
Interest rate Monthly
Amortisation At the end of the term
Risk grade A+ (96 out of 100)
Personal warranty From owner
Collateral No
Capitalia's cofinancing 4000
Target amount 120000
Successfully funded