Crowdfactoring financial concepts.

Throughout this month we have filled our social networks with flowers and financial concepts related to factoring with two clear objectives: - Feel the spring even in confinement. - Make all the terms we handle on a daily basis at Inversa more understandable. We finish this difficult and extraordinary month of April 2020 for everyone with the hope of having achieved it. Today it's time to gather all those concepts in our blog summarized in a small guide where they can be consulted at any time. Index:

• Factoring.
• Crowdfactoring.
• Commercial effect.
• Invoice.
• Promissory note.
• Assignment of commercial credit.
• Endorsement.
• Drawee.
• Assignor.
• Payment window.
• Rating.
• Credit opinion.
• CIRBE.

Factoring:  Factoring is a tool that arises to solve the liquidity problems of companies. Contrary to what may seem, these problems usually occur in businesses with profits but with difficulties in meeting their short-term obligations and financial commitments. Sometimes they can die of success by running out of liquidity even if they have profits in their income statement. Invoicing means that the sales figure in the income statement increases, but the collection of invoices is often delayed over time. Streamlining the collection process will improve the company's liquidity. Companies turn to factoring to obtain financing for their outstanding invoices. Through an invoice assignment contract, the early collection of it is achieved minus interest and fees. It can be: Recourse. In this case, the financial institution does not buy the debt. Non-recourse. It is a debt purchase by the financial institution that therefore allows it to be removed from the balance sheet. Crowdfactoring:  Crowdfactoring is a model of collective financing that through the advance of invoices and promissory notes connects the liquidity needs of SMEs and self-employed with a community of investors seeking a return on their savings. It is a market of invoices where three fundamental actors participate: - The company or self-employed person seeking financing. - Investors who buy part of the invoices in exchange for interest. - The platform that analyzes and publishes the invoices and promissory notes and serves as a connection between the two parties. We are talking, therefore, about a collaborative, non-speculative economic model that invests in the real economy. Commercial effect:  Document (title-security) used as a means of payment other than money. There are three types: - Bill of Exchange. Payment mandate in favor of a third party; with it we can collect from the debtor of our debtor. It must be issued on official stamped paper. Unlike the other two, it does not have to be backed by a bank. Three parties intervene; drawer who issues the bill, holder or beneficiary and drawee who is obliged to pay. - Check. Unconditional and immediate payment order. Three parties also intervene; drawer, holder, and drawee (the bank in this case). - Promissory note. Promise of payment with future maturity. Two parties are involved, the one who undertakes to pay and the one who has the right to collect. All three are executive titles, that is, in case their payment is not met, they can be presented to a judge for direct collection without the need to file a lawsuit. Exchange and Check Law (Law 19/1985, of July 16). Invoice:  An invoice is a commercial document that reflects a commercial transaction between two parties. It reflects a right to collect for goods delivered or services rendered. This right to collect can be transferred to another party through an "Assignment of credit". It must include at least: Place and date of issue, Number and if applicable series, Tax data of the issuer, Goods delivered or services rendered, Tax rate, Total consideration. For added security, it is possible to take out credit insurance to cover all invoicing. This is a resource widely used in times of instability and in the case of exports. Promissory note:  A promissory note is a credit instrument, a promise of future payment, a firm commitment. It can be: - To order, that is, it allows the promissory note to be assigned by Endorsement. - Not to order, it does not allow endorsement, it can only be transmitted through Assignment of credit. The commitment to pay is usually made on a current account. Among the data to be included are: - Denomination of the promissory note - Amount of promise of payment - Place of payment - Maturity - Name of the person to whom payment is to be made. - Date and place of signing - Signature of the issuer - On the back, space to fill in endorsement and guarantee. Assignment of commercial credit:  It is the act by which a assignor (natural or legal person) transfers its collection rights (invoices or promissory notes not to order) to a assignee (new creditor) in exchange for consideration. The signing of an "Assignment contract" will be necessary; this document will include, among other things, the identification and amount of the assigned credit, the identity of the debtor, the date of the assignment, and, if applicable, the price paid by the assignee and the form of payment. In principle, exchange effects are not transmitted by assignment of credit. However, the person issuing the exchange document may include the clause "not to order" (not endorsable). In the latter case, the transmission of the credit represented by said exchange effect can only be made through an assignment contract. It would be the case, for example, of promissory notes not to order. Endorsement:  Statement placed on a security (check, bill of exchange, promissory note "to order"...) by which the collection right is transferred to a third party (endorsee). This act will be carried out by the creditor (endorser) signing on the back of the security. It will be necessary to deliver the document to the new creditor for this endorsement to be effective. The act of endorsing must be total, that is, only a part of the debt cannot be endorsed. The amount to be paid, to whom it is addressed, and the place and date where the payment will be made must be reflected. In the case of a promissory note, it is usually domiciled for payment in a bank account. To cash it, we must give it to our bank to manage the collection with the other entity. Drawee:  Drawee or Debtor is the person or company "obliged to pay" a commercial instrument (promissory note, invoice...) for the purchase of a product or service received. In the case of the check, the drawee is the bank entity that pays the amount of the check. In Crowdfactoring and specifically in Inversa's invoice market, the invoices or promissory notes of our clients' drawees (assignors) are shown. Our best guarantee will therefore be the quality and solvency of those drawees. That is why, although we study both parties, our analyses focus mainly on them, those who have to pay the debt. Assignor:  The assignor is the one who renounces a good, right, action, or value in favor of another person or entity, usually in exchange for consideration. Payment window: Sometimes companies establish payment windows, that is, they set one or more days of the month to make all payments together for invoices with different maturities. For example, if the 10th and 20th of each month are established, an invoice due on the 11th will not be paid until the next payment window on the 20th. The reason for setting these liquidity windows is to have a more thorough control of business finances and not to risk their treasury. When investing in an invoice, we must take into account that in these cases we will not always collect on the due date, but it will only be small management delays. Rating:  Rating is a rating of the credit quality of a company to meet its obligations. At Inversa, we use the INFORMA Rating (Spain), which represents an external and independent rating expressed on a scale of 0 to 20 arranged in ascending order (from lower to higher quality). - From 16 to 20 These are companies with low risk. - From 11 to 15 These are companies with medium-low risk. - From 7 to 10 These are companies with medium-high risk. - From 0 to 6 (Inversa does not operate below this level). These are companies with a high commercial risk. And internationally, the Dun & Bradstreet Rating expressed on a scale of 1 to 4 arranged in descending order (from higher to lower quality). 1-Minimum Risk 2-Risk lower than average 3-Risk Higher than average. 4-High Risk (Inversa does not operate below this level). The public administration lacks a Rating. Credit opinion:  The Credit Opinion establishes the maximum amount of commercial credit advisable for a company, based on the resources it generates. Since an invoice is a commitment to future payment (credit payment), in Inversa, the INFORMA credit opinion (a figure between 0 and €6,000,000) regarding the debtor company can be consulted on each invoice, as an additional measure of collection guarantee; only the invoices of companies whose credit opinion is equal to or greater than the amount of the invoices will be published unless it is insured and there is an extension of the credit insurance covering the difference. CIRBE:  The Central Credit Information Register of the Bank of Spain (CIRBE) is a public service that manages a database of the direct risks (loans, credits) and indirect risks (guarantees or guarantees) that financial institutions have with their clients. This database is updated monthly with the information that the entities themselves are obliged to provide to the Bank of Spain. It is a fundamental tool to know the debt capacity of a person or company and thus be able to assess and decide whether to grant them borrowed money or not. However, it is necessary for the client to authorize in writing to request information about him, since anyone who wishes can access the information that CIRBE has about them free of charge, but not the information about other people.