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Factoring in Czech Republic

The Czech Republic, with an area of 78,864 km² and a population of 10.4 million, has a thriving factoring industry. Key economic figures include a labour force of 5.3 million and a GDP of $82 billion. Factoring originated in the mid-80s to provide guarantees for exports and has evolved to support small and medium enterprises (SMEs) with financing, cash flow, and debt collection. The sector mainly engages in the purchase of receivables, with 80% of operations domestic. To better serve, improvements in the legal framework and effective bankruptcy procedures are needed, as emphasized by Jiri Matula from Transfinance a.s.

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Factoring in Czech Republic

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  1. Factoring in Czech Republic

  2. Area 78,864 km2 Population 10.4 million Labour force 5.3 million Capital Prague LanguageCzech CurrencyCzech Crown (CZK) GDP (US$ bn) 82,0 CPI app. 1 % Gross Foreign Debt (US$ bn) 29,0 10Y Bond Yield 4,4% CZK/EUR 31,2 CZK/USD 29,0 3M PRIBOR 2,3 % Key Figures

  3. Economy Structure

  4. Roots of Factoring • Mid 80s in Czechoslovakia • Purpose: guarantee for exports • Fastened FX Cash Flow • Clients: FTO‘s selling consumer goods • Partners: factors in Scandinavia, UK, Germany, Austria, France • Turnover 1989 >100 m EUR

  5. Factoring Now • Purchase of Receivables • Domestic - 80% Recourse • Export – 80 % Non-recourse • Import – 30 % of International (FCI) • Financing of A/R ( Nearly Entirely ) • Less Credit Cover • Collection and S/L Admin

  6. Factoring Clients • Small and Medium Size Companies • Startups /Closedowns • Transforming Companies • Production, Trade and Transportation • T/O 0,75 to 30 Mio EUR • Average Contract Retention 6 to 8 Years

  7. Factoring Volumes

  8. Outlook

  9. Role of Factoring • Distributes working capital to SMEs • Selects and provides financing to small companies with good receivables in the phase of their expansion • Supports companies in their difficult times

  10. What We Need ?In Order to Better Serve Our Clients • Stable Legal Framework • Specification of Factoring in Commercial Code, differentiation from “Bad Debt“ trading • Revision of current wording of Assignment in Law (Ban of Assignment ) • More effective legal system and bankruptcy procedure

  11. Thank You Jiri Matula, Transfinance a.s, Prague, Czech Republic, jiri.matula@transfinance.cz

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