Factoring financing

Factoring is a financial service where a business sells its short-term trade receivables (invoices) to a bank or factoring company. This allows the business to receive immediate cash instead of waiting for buyers to pay, improving liquidity and reducing the risk of late or non-payment. The bank typically manages collection and may provide insurance against buyer default.

• Domestic factoring: Financing receivables from Hungarian buyers.
• Export factoring: Financing receivables from foreign buyers.
• State receivable financing: Specialized solutions for claims against government entities.
• Balance sheet optimization solutions: Structuring receivables to improve financial ratios.True sales factoring and reverse factoring or supply chain factoring
• For tailor made solutions please contact your relationship manager at the bank or contact us at faktor.sales@mbhbank.hu

• Immediate liquidity: Access funds tied up in receivables.
• Collateral-free financing: Typically no additional security required.
• Risk mitigation: Insurance against buyer non-payment.
• Administrative relief: Reduced burden of managing collections.
• Flexibility: Funds can be used for supplier payments or investments.

MBH Bank’s factoring service offers numerous benefits, especially for companies that work with deferred payment terms with their partners.

• Fast financing: The value of submitted invoices can be paid as early as the day following performance, so there is no need to wait for the customer’s payment deadline.
• Flexible limit management: The available amount adjusts to the value and volume of issued invoices, allowing financing to be easily aligned with the company’s needs.
• Simple administration: Using factoring does not require complex procedures—only a simple utilization order is needed, and administration is handled electronically, quickly and efficiently.
• Risk management: In the case of an insured structure, the bank partially or fully assumes the risk of customer non-payment, reducing uncertainty arising from receivables.
• Cash-flow optimization: Deferred customer payments do not burden the company’s own resources – the bank’s pre-financing ensures more stable operations and better predictability.

The outcome depends on the selected factoring structure:

• Recourse factoring: If the customer does not pay, the bank is entitled to reclaim the amount of the purchased receivable from the company; therefore, the non-payment risk remains with the company.
• Non-recourse factoring: In the event of customer non-payment, the bank bears the risk, and the company is fully released from the risk of collecting the receivable.

MBH Bank’s experts help select the structure that best fits the company’s needs.

At MBH Bank, applying for factoring is simple and fast. As a first step, it is advisable to assess the company’s needs and financial position through a personal or online consultation. After that, the bank’s experts assist in selecting the most suitable factoring structure, and once the contract is signed, the financing process can start immediately.

The goal of balance sheet optimization solutions is to improve a company’s financial ratios. The point of the structure is that the company sells its trade receivables to the bank, allowing them to be removed from the balance sheet. As a result, the balance sheet total decreases, liquidity and leverage ratios improve, and instead of receivables, immediately available cash appears in the accounts.

The aim of balance sheet optimization is to present more favorable financial indicators, thereby strengthening the company’s market perception and financing position. By selling trade receivables to the bank, the balance sheet total decreases, the leverage ratio improves, and the proportion and turnover of receivables improve.

This structure can be particularly beneficial in the following cases:

• improving credit ratings – for example, prior to expanding bank financing,
• ahead of a bond issuance or other capital market transactions,
• improving owner or stock market perception – especially for companies with international ownership or publicly listed entities.

Improved financial indicators can contribute to more favorable financing conditions and strengthen investor confidence.

Balance sheet optimization factoring differs from classic factoring solutions in several respects, primarily in the handling of receivables, risk allocation, and accounting treatment. Key differences include:

• The bank typically purchases receivables on a non-recourse, final basis.
• Receivables are purchased at 100% of face value, so the company does not incur impairment losses.
• The receivable can be derecognized from the company’s books, reducing the balance sheet total.
• The consideration received appears immediately as available cash – for example, as a bank deposit.
• The full risk of customer non-payment is borne by the bank; the company is released from it.

By contrast, in traditional factoring structures:

• Receivables are often sold with recourse, meaning the risk may revert to the company in case of non-payment.
• Derecognition of receivables from the accounts is not always possible, so the impact on the balance sheet structure may be more limited.

Balance sheet optimization factoring is therefore a more complex but more targeted solution, specifically designed for companies aiming to improve financial ratios and optimize their balance sheet structure.

One of the key advantages of the structure is that it reduces financial risk arising from customer non-payment. Since the bank purchases the receivable on a non-recourse, final basis, the risk of late payment or default by the customer is fully transferred to the bank.
As a result, the company is relieved of the financial consequences of non-payment or customer delays. This is particularly beneficial for high-value invoices or those with long payment terms, where the risk is higher. The structure therefore not only improves the balance sheet structure but also increases financial stability and operational security.

MBH Bank’s Supply Chain Finance (SCF) program is a digital platform-based reverse factoring solution. At its core, it allows suppliers to receive payment for invoices approved by the buyer immediately after fulfillment, without having to wait for the original maturity date. This financing structure enables buyers to utilize longer payment terms while the suppliers' liquidity remains intact – or, in fact, significantly improves.

For buyers:

• Enables the use of longer payment terms without causing liquidity difficulties for suppliers.
• Contributes to more stable, long-term supplier relationships.
• Simplifies and makes invoice management and financial planning more transparent.
• Also has a balance sheet optimization effect, improving financial ratios.

For suppliers:

• Enables access to invoice payments as early as the day of fulfillment.
• Reduces the risk arising from customer non-payment.
• Access to liquid funds at competitive, lower financing costs.

If you need additional information or personalized advice regarding MBH Bank’s domestic factoring services, we are available at the following contacts:

• E-mail: faktor.sales@mbhbank.hu
• Phone: +36 1 268 8100 or +36 80 350 350
• In person: through your corporate relationship manager

With our expertise, we support you in finding the most optimal financing solution for your business.