What is Factoring:

factoring; It is the process of transferring the receivables that have arisen or will arise from the sales of forward goods or services documented with an invoice to the Factoring company and providing financing to the Factoring customer in return for these receivables.

There are three parties in the factoring transaction. These; Factoring Firm, Factoring Customer (Firm or Service Seller Firm), Drawer (Borrower Company-Buyer of Goods or Services)

How the Factoring Transaction is Performed: The factoring process starts with your application to our firm. The documents required in the application process are:

• Invoice for your commercial transaction
• Balance sheet and income statement for the last three years, approved by the tax office
• last term balance sheet
• Signature Circulars
• Trade Registry Gazette containing the company's articles of association and amendments
• Chamber Registration Certificate
• Copy of identity card
• Copy of tax plate

Factoring agreement is signed with your company as a result of the evaluation we will make in line with the invoice and check that certifies your receivables arising from your commercial transaction and the documents mentioned above belonging to your company. Upon completion of the transactions, your company transfers its receivables arising from the commercial transaction to our Factoring company. In return, the cash payment you need is made to your company over the invoice amount after deducting the commission and fees of the factoring transaction. Our Factoring Company issues an invoice to you in return for the commission and fee deduction for the factoring transaction.

What are the Advantages of Factoring Process:

• With the Factoring transaction you will make, your company's receivables in return for the sale of goods or services on a deferred basis turn into cash before it becomes due. In this way, you will solve the time problem in meeting your cash needs.
• By converting your forward receivables into cash, you increase the liquid power of your company. This helps your company to have a stronger working capital.
• If the supplier companies that provide input to your company cannot make deferred sales, and if your company's receivables are in a deferred structure, the factoring process helps both parties to solve the financing problem.
• Thanks to the cash you will obtain through the factoring transaction, you can gain a bargaining advantage by using your cash payment power against the suppliers that provide input to your company.
• Particularly dependent on the timing of the cash flow of small and medium-sized enterprises; Factoring transaction, which provides financing in a short time, provides a great advantage to your company in terms of growth, making new investments, increasing capacity, entering new markets, providing competitive advantage.
• By not allocating additional time for the collection of your future receivables, you will be solving a problem that may keep you busy.
• Thanks to the cash flow that the factoring process will provide, you can increase the competitive power of your company, and therefore, you can have the opportunity to expand your company further by offering more suitable sales conditions to your customer base.
• In terms of your company accounting, it becomes easier to track and record your transactions.

General Information on the Concepts Used in Factoring Transactions:

Factoring transaction types are basically divided into two.

a) Domestic Factoring: It is made between the Factoring company located within the borders of the country, the Factoring customer and the drawer (borrower). The transaction procedure is as in the section explaining how the factoring transaction is performed.

b) Foreign Factoring : It is the type of transaction that is carried out in cases where the Buyer and Seller companies are located in separate countries and through correspondent factoring companies located in the countries of both companies.

Factoring types are divided into two in terms of guarantee.

• Revocable (Recourse Factoring): In this type of transaction, the Factoring company provides financing and collection services to the Factoring customer without assuming the risk of receivables. In case the receivables transferred to the factoring company are not paid by the buyer (who owes the seller company), the factoring company recourse to the seller (the factoring customer) and demands that he pay the payment made to him.
• Irreversible (Irreversible Factoring): In this type of transaction, the factoring company undertakes the receivable risk of the factoring customer within certain limits. It is the type of transaction in which the payment made by the factoring company cannot be demanded back if the receivable is not paid by the buyer (who owes the seller company).

Concepts:

Receivable: The price that arises in return for the goods and services sold by the factoring customer.

Factoring Customer: The company that is the seller of goods or services that transfers its receivables with invoices and other supporting documents to the Factoring company after the sale of goods or services on credit. The company that carries out the factoring transaction.

Factoring Company: A company that operates under the supervision and control of the BRSA (Banking Regulation and Supervision Agency), within the framework of the current legislation, that takes over the invoice-based deferred receivables with the relevant supporting documents and pays cash in return.

Drawer (Borrower): A company that purchases goods and services on time and pays its debt with valuable documents such as checks and promissory notes. The party in the debtor position in the commercial relationship and factoring transaction. The buyer company to which the factoring customer sells goods and services.

Factoring Commission: The commission taken over the invoice due to factoring transactions.

Factoring Fee: The interest amount accrued on a monthly basis over the payment made based on the factoring transaction.

Factoring Agreement: The agreement signed between the client and the factoring company, which determines the terms and legal framework of the factoring transaction.

Legal Regulations Regarding Factoring Transactions

The first regulation regarding the regulation and supervision of the activities of factoring companies was made in 1994. Decree Law No. 545 on the Amendment of Certain Articles of the Decree-Law on Money Lending, dated 30.9.1983 and numbered 90, was published in the Official Gazette dated 27.06.1994 and numbered 21973, and entered into force. With the 12th article of the Decree Law No. 545 and the 11th article of the Decree Law on Lending of Money No. 90, a subsection title as “II - Activities of Financing Companies and Factoring Companies, Establishment and Operating Conditions” has been added and article 12 has been added. The establishment and operating conditions of Factoring Companies have been regulated. Afterwards, the “Regulation on Establishment and Working Principles of Factoring Companies” prepared by the Undersecretariat of Treasury based on the authority given by the provision of Article 13 of the Decree-Law No. and entered into force by being published in the Official Gazette No. 22148. This Regulation was later amended in 1997, 1998, 1999 and 2001, respectively, and remained in effect until 10.10.2006 and was replaced by the Regulation on the Establishment and Operating Principles of Financial Leasing, Factoring and Financing Companies, which came into force after being published in the Official Gazette dated 10.10.2006 and numbered 26315. He left it to. Some articles in the regulation were amended on 23.03.2008. Finally, the Financial Leasing, Factoring and Financing Companies Draft Law has been prepared and is in the process of enactment. The draft text is published on the official website of the Banking Regulation and Supervision Agency. When the relevant law is approved, it will be placed on our website.

Some articles in the regulation were amended on 23.03.2008. Finally, the Financial Leasing, Factoring and Financing Companies Draft Law has been prepared and is in the process of enactment. The draft text is published on the official website of the Banking Regulation and Supervision Agency. When the relevant law is approved, it will be placed on our website.

After all, as the legislation that determines today's rules; The Financial Leasing, Factoring and Financing Companies Law entered into force by being published in the Official Gazette dated 13.12.2012 and numbered 28496 with the law number 6361 and dated 21.11.2012. The Regulation on the Principles and Principles of Operations and the Regulation on the Principles and Procedures to be Applied in Factoring Transactions dated 24.04.2013 and numbered 28627 was published in the official gazettes dated 04.02.2015 and numbered 29257.