Factoring in the 2011

The position of factoring market on the basis of statistical data of  2011:

2010

2011

Gross factoring turnover
(bln HUF)

860

888

Clientele (enterprise)

3027

3048

Maturity (day)

60

68

Rate of recourse factoring turnover (%)

48

64


The chart below presents the segmental gross factoring turnover:

SEGMENT

2010

2011

Agriculture

2

4

Industry

33

37

Building Industry

7

7

Trade

35

30

Services

12

13

Other

11

9

Total

100,0

100,0


Dividing factoring turnover in accordance with the net income of clientele indicates the size of enterprises requiring factoring services. (as per %)

YEARS

Micro
Enterprises

Small
Enterprises

Medium
Enterprises

Large
Enterprises

2010

12

53

34

1

2011

11

54

32

3

 

    Factoring in the 2010

The position of factoring market on the basis of statistical data of  2010:

2009

2010

Gross factoring turnover
(bln HUF)

745,3

883,5

Clientele (enterprise)

3282

3131

Maturity (day)

66

60

Rate of recourse factoring turnover (%)

73

55


The chart below presents the segmental gross factoring turnover as of the last 3 years:

SEGMENT

2008

2009

2010

Agriculture

4

3

2

Industry

25

32

34

Building Industry

10

8

7

Trade

42

35

34

Services

12

9

12

Other

7

13

11

Total

100,0

100,0

100,0


Dividing factoring turnover in accordance with the net income of clientele indicates the size of enterprises requiring factoring services. (as per %)

YEARS

Micro
Enterprises

Small
Enterprises

Medium
Enterprises

Large
Enterprises

2008

28

51

21

-

2009

17

55

28

-

2010

12

53

34

1

 

    Annual General Meeting to Approve Final Accounts and Renew Mandates in April 2010

On the last day of April the Hungarian Faktoring Associaton held its Annual General Meeting approving its final annual accounts and renewing mandate of its members.

Ferenc Csáki, CEO of Magyar Factor Zrt. was re-elected as President and with the exception of one member the former Board continues to direct the Association.

Gabriella Rédei, CEO of Next-Faktor Zrt. was re-elected as Vice President of the Board, the former-new members are Anna Bali, Executive of Primátus Zrt. and Tamás Molnár Executive of MKB Bank. A new member of the Board is Zsolt Major-Maróthy, CEO of CE Faktor Zrt.

For the first time in their modern history, the services of factoring accounts receivables faced a 10% market reduction. In spite of this the HUF 750bn gross factoring turnover has grown threefold in the last six years and according to the estimates of the Association this amount is equivalent to the 10% of short-term bank-loans to the SME-sector.

This clearly signals that factoring is far from being a group of marginal financial service, on the contrary, it is a substantial constituent of short-term financing services.

It remains to be one of the main objectives of the Association to create a financing background to our natural clients, the SMEs, where we can foster their growth and help them strengthen.

In accordance with this, the Association takes an active part in preparing for the modification of regulations concerning small and middle-sized companies, e.g. searching for ways to reduce ’chain debts’.

For years it has also been our principal objective to establish a program subsidizing interest based on EU-resourses for those micro and small companies which can survive with the help of lower factoring fees. These resources could help enterprises which – in spite of the financial crisis – have potential markets and would be able to grow but cannot obtain resources on account of the narrow-scale and expensive financing services of banks. Hopefully, such a program for the development of companies can be launched and operated in the near future.

 

    Factoring in the 2009

The position of factoring market on the basis of statistical data of  2009:

    2008

    2009

    Gross factoring turnover
    (bln HUF)

    831

    739

    Clientele (enterprise)

    4474

    2980

    Maturity (day)

    69

    69

    Rate of recourse factoring turnover (%)

    73

    73


The chart below presents the segmental gross factoring turnover as of the last 3 years:

    SEGMENT

    2007

    2008

    2009

    Agriculture

    5

    4

    3

    Industry

    26

    25

    32

    Building Industry

    13

    10

    8

    Trade

    39

    42

    35

    Services

    10

    12

    9

    Other

    7

    7

    13

    Total

    100,0

    100,0

    100,0


Dividing factoring turnover in accordance with the net income of clientele indicates the size of enterprises requiring factoring services. (as per %)

    YEARS

    Micro
    Enterprises

    Small
    Enterprises

    Medium
    Enterprises

     2008

    28

    51

    21

    2009

    17

    55

    28

 

On the General Meeting of 23 09 2009 the Association awarded Károly Martinkó with the For Factoring Medallion. The award was handed over by Ferenc Csáki, president of the Association. In this manner the members recognized Károly Martinkó's outstanding achievement in the foundation of the Associaton, in defining its activities and in the development of factoring services.

 

    FACTORING IN RELATION TO VAT

At the end of 2007 the Association requested the Ministry of Finance to opinionate on Value-Added Tax Act of 2008 concerning factoring. The Association holds that as far as VAT is concerned the principal guideline is the actual economic content of factoring. The opinion of the Association concurs with the Unidroit Agreement, which is considered valid worldwide. The Agreement was ratified by Hungary too. The Agreement defines factoring as a contractual form with sales clause including a number of services based on assignment. Its elements are:

  • Advance payment, finance
  • Ledgering receivables
  • Collection of receivables for benefit of clients
  • Protection against default in payment by the debtors.

Since factoring is a combination of services (minimum 2, or 3,4), a dominant activity cannot be defined. According to the Association each service can be handled as regard to VAT in the following terms:

  • Advance payment, finance – VAT free. The following items are to be listed here:
    Interest charge, commitment fee, withdrawal fee, interest on arrears, etc.
  • Ledgering receivables – VAT taxable. The following items are to be listed here:
    Factoring fee, due diligence fee, contracting fee, contract amendment fee, contract termination fee, e-factoring fee, fee of reporting on ledgered receivable, etc.
  • Collection:- VAT taxable. The following items are to be listed here: factoring fee, notices, fees of non-litigious and litigious proceedings, collection commission, debtor due diligence fee, up-to-date information on debtors, forwarding charges of cash flow or flat rates covering them.
  • Protection against debtor default in payment– VAT taxable. The following items are to be listed here: risk charge, credit insurance charge, due diligence fee, limit modification fee etc.

After negotiating with the Ministry of Finance the Hungarian Inland Revenue Office has recently reviewed the Association’s request and confirmed in its statement the professional opinion of the Association. Quotation from the letter:

„Out of the above listed elements of services – on the basis of its content - the service referred to in point 1)can belong to the financial services listed in VAT Act points b)-f) of Subsection (1)of Section 86. and the services listed in points 2)-4)….. are taxable at standard rate.

On the basis of the aforesaid…factoring as defined by the Unidroit Agreement , and taking into consideration that it can never be solely regarded as finance (since it has to contain at least two of the above listed elements of services)is a complex transaction in which the fees paid by the client to the factor are billed burdened with 20%VAT rate.

At the same time factoring typically consists of financing element too, which element,  - considered individually – would be tax free service on the basis of the VAT Act point d). Subsection(1) of Section 86.

According to our standpoint, if, during factoring process, the financial element appears and it is clearly separable from other services provided by the factor, the equivalent of the financial service is to be invoiced tax-free, while the equivalent of other services is to be invoiced charged with 20 %VAT.”

 

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