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Silent Factoring and related risks

Silent Factoring in Switzerland Silent Factoring in Germany
Description of the product
  • The invoice is ceded and sold to Advanon
  • A bank account is set up by the seller and ceded to Advanon.
  • Advanon has PoA to withdraw incoming payments form this account
  • Seller informs the debtor that invoice is payable to this shared account without informing him about the sale of the invoice
  • The invoice is ceded to Advanon
  • A Wirecard (bank) account is set up which belongs to Advanon but carries the name of the seller
  • Seller informs the debtor that invoice is payable to this shared account without informing him about the sale of the invoice
Legal claims
  • Against the debtor on basis of the invoice payable
  • Right of recourse against the seller
  • Against the debtor on basis of the invoice payable
  • Right of recourse against the seller
Credit Risks
  • Debtor default: debtor cannot pay the invoice

→ Recourse against the seller- Once debtor defaults, credit risk shifts to the seller

  • Default of seller: as the account belongs to the seller, the money in it is frozen in case of default – lengthy process to prove that invoice belongs to Advanon.
  • Debtor default: debtor cannot pay the invoice

→ Recourse against the seller- Once debtor defaults, credit risk shifts to the seller

  • Default of seller: as the account belongs to us, the money cannot be frozen
Fraud Risk
  • Forging of invoice: we are not allowed to contact debtor for verification
  • Forging of financial statements

→ These are not audited statements, we have a risk-adjusted approach to verify them but cannot entirely eliminate this risk

  • Forging of invoice: we are not allowed to contact debtor for verification
  • Forging of financial statements

→ These are not audited statements, we have a risk-adjusted approach to verify them but cannot entirely eliminate this risk

Operational Risk
  • Whilst the contract forbids the seller to withdraw money from the shared account, it is technically still possible as the account belongs to the seller
  • Also forbidden but possible: Seller can withdraw PoA for Advanon to this account
  • In case of seller default the account would be frozen until we can prove our claim on the invoice
  • Limited as we control account and that account can not be frozen
Updated on June 13, 2018

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