50th anniversary of FactorBank AG:
FactorBank – improving corporate liquidity for 50 years
- Founded in 1965, FactorBank AG, which has been a wholly-owned subsidiary of UniCredit Bank Austria since 2007, is clearly number one in the Austrian factoring business
- In 2014 with annual purchased receivables of more than EUR 8 billion, the market share of FactorBank AG was an impressive 50 percent of the Austrian factoring market
- The entire factoring market also grew 16 percent in 2014 to EUR 16.4 billion – thereby almost tripling in size since 2010
- Nonetheless, the factoring potential in Austria has yet to be fully exhausted by international standards
Basel III pursues the ambitious objectives of reducing the dependency between the state and banks, but also that between companies and banks. This means offering alternatives to loans, and is why the market for corporate financing has undergone such radical change in recent years. While credit financing was almost the only external funding instrument on the market a few years ago, the growing global influence has since produced a new type of corporate financing. Companies are increasingly turning to alternative sources of capital, one of which is factoring – the purchase of short-term trade receivables. Through factoring, companies are able to exert a positive influence on their financing structure and consequently on internal bank ratings. FactorBank, a wholly-owned subsidiary of UniCredit Bank Austria since 2007, established itself on the Austrian market 50 years ago. It has been led by Michael Kaltenbeck since 2010.
Helmut Bernkopf, Bank Austria Director for Private and Corporate Customers: "As the leading bank for corporate customers in Austria we are a long-term financing partner for Austrian businesses. Factoring as an alternative form of financing is an important component in a balanced financing mix. We are seeing a clear-cut trend towards factoring as a way of reducing balance sheet totals and therefore improving indicators. Since more and more companies are recognising the need to optimise their financing structures, the success story that is factoring is set to continue in the coming years as well."
Michael Kaltenbeck, CEO of FactorBank AG: "Factoring used to be a form of financing that did not enjoy a particularly good reputation. This situation has now changed, and the benefits are also being used by large, listed companies. Factoring is a simple way of improving a balance sheet that is suited to almost every industry. This is relevant particularly in view of the equity capital regulations under Basel II and Basel III."
FactorBank as a business partner
In the beginning, factoring was often incorrectly understood as a "bail-out" option for financially weak companies or those in business difficulties. In the last few years, however, there has been a huge rethink – driven also by the new regulatory climate – and so factoring is today used by many successful companies as a modern way of optimising financial structures and as a very good addition to their financing portfolio.
The financing and services model of Inhouse Factoring is particularly interesting both for small and medium-sized companies from a sum of roughly EUR 5 million, and for large corporates with very good credit ratings. Up to 90 percent of sold invoices are generally paid in advance with barely any change in the bookkeeping processes of the company. Combined with trade credit insurance, this creates an ideal blend of the benefits derived from liquidity and reducing balance sheets. Smaller businesses continue to use the Full Factoring product, where FactorBank AG takes on the accounting and management of accounts receivable alongside providing sufficient liquidity.
Factoring costs have also changed significantly in the 50 years since this service has been available in Austria. Back then, factoring was an expensive form of refinancing due to the high manual effort involved. Today, thanks to the largely automated technical processing in use, factoring solutions can easily compete with working capital loans in terms of cost.
Enquiries: Bank Austria Media Relations Austria
Martin Kammerer, Tel. +43 (0) 50505 - 52803