Difficulty Management

Secure your financing in crisis / restructuring situations

affacturage groupe international

Contexts encountered

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Securing the financing of your operation: replacing or supplementing existing bank credit lines

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Replacing the current factor

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Limiting the impact of late payment by your customers

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Financing a takeover as part of a divestiture plan (newco)

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Setting up financing during an amicable or collective procedure

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Obtaining an emergency financing line (within 2 weeks)

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Renegotiating debts through an agent

Benefits of factoring

Benefits of factoring
  • Long-term financing that adapts to the company’s development
  • Possibility of setting up financing during an amicable or collective procedure
  • Very rapid implementation (2 weeks)
  • Resistance to changes in shareholders

Focus on factoring for companies in difficulty

Implementation or renegotiation of a factoring line in an amicable or collective procedure

When a company is experiencing difficulties, whether temporary or systemic, finding sources of financing can be complex. Banks tend to reduce their exposure and cut short-term credit lines. Historically, factoring was created to support companies in complicated contexts. Because it takes receivables as collateral, factoring is more robust and sustainable than conventional bank financing (Dailly, loan, discount, overdraft, etc.).

A company entering an amicable or collective procedure that already has set up a factoring programme must ensure the support of its current partner. If this support is not confirmed, it will be possible to quickly change of factor. Factoring companies do not all react in the same way to difficulties: some want to and are able to accompany businesses; others quickly restrict their financing and seek to terminate the contract. When you have a partner prepared to support your company in its difficulties, your outlook is brighter. It is possible to expand the scope of factoring, increase financing and secure cash flow more effectively.

Given the tight timing and pressure on management, the role of Chateaudun Crédit is to help the company find the right partner without having its financing strategy imposed on it by its environment.

Business case

Our mission: Call for tender and implementation of a factoring contract to replace the current factor

Background: French aeronautics subcontractor in financial difficulty, whose factoring is key to the continuation of its activity

Objectives

  • Finding an alternative to the current factor (deadline: 4 months with due date)
  • Obtain equivalent financing conditions on a highly concentrated customer base in the aeronautics industry

Our achievments

• Study of the technical risks (concentration, customer-supplier compensation, transferor risk)
• Our strong involvement in factor audits and in the preparation phase of the factor credit committee

Information on the deal

  • Activity: Design and production of electronic sub-assemblies for the industry
  • Country: France
  • Customers: Aeronautics and automotive companies
  • Type of contract: Confidential balance divestiture
  • Line: € 50 million
  • % of financing: 90% of receivables transferred
  • Cost: <1.50%
  • Duration: unspecified
  • Credit insurance: delegated

Our added value

  • Identification of technical risks and recommendation of solutions allowing the factor to finance in complete security
  • Obtainment of a credit agreement to improve financing ratios
  • Ongoing advice to the Finance team to successfully complete the project within the deadline imposed by the end of the existing contract
  • Coordination and regular monitoring of the relationship between the current factor and the new factor buying the outstanding amounts, to avoid a cash shortage during the migration of the contract