MAY 28TH 2010

FACTORING INTERNACIONAL

L. Gabriel Segura

President and founding officer of CVCredit Inc, a Miami-based company which focuses in USA-domestic and international factoring services.

Eight years experience in international factoring services

Nine years experience in international banking including: trade financing, commercial lending and correspondent banking.

MBA - Florida International University. Bachelors Degree in Industrial Engineering - Universidad de los Andes.

CVCredit Inc. focuses in:• USA-domestic accounts• International clients selling to USA buyers

 CVCredit is the affiliate financial company of Credivalores for the United States. Credivalores’ 50-year-old holding company has participation in other industrial sectors such as: sugar mills, brokerage firms, gas stations, energy power plants and financial services.

 

Who we are

Agenda

What is factoring - general characteristics

Statistics - tendencies

The Industry in the USA vs. Latin America

Conclusions and Recomendations

AGENDA

What is Factoring Characteristics

1. Delivers product and issues invoice

3. Accepts product and endorsement

2. Endorses Invoice

4. 80% advance

6. 20% balance payment

5. Payment

Factoring without recourse. (40%)

Factoring with recourse - Accounts receivable financing or discount of accounts receivable. (60%)

Reverse Factoring – Cadenas Productivas

Source: abfjournal April 2009, with a content provided by Factor Chain International 2010

Statistics - Tendencies

Statistics – Tendencies:

Source: (1) Factor Chain International(2)Wikipedia – GDP list provided by the International Monetary Fund. (3) % calculated by L.G.Segura

Factoring Turnover By Country 2009 (in Millions of EUR)Nr. of

CompaniesCountry Domestic International Total

% of World

% of GDP (2) (3)

EUROPE

15 France 109,581 18,601 128,182 10% 6.9%

55 Germany 70,400 25,800 96,200 7% 4.1%

45 Italy 113,250 11,000 124,250 10% 8.4%

20 Russia 8,500 80 8,580 1% 1.0%

24 Spain 94,634 9,588 104,222 8% 10.3%

50 United Kingdom 182,863 12,750 195,613 15% 12.9%

559 Total Europe 760,699 115,950 876,649 68%

AMERICAS

5 Argentina 330 5 335 0% 0.2%

2 Bolivia 18 0 18 0% 0.1%

590 Brazil 29,600 40 29,640 2% 2.7%

57 Canada 2,700 550 3,250 0% 0.4%

120 Chile 14,000 500 14,500 1% 12.9%

14 Colombia 2,340 51 2,392 0% 1.5%

11 Mexico 2,100 20 2,120 0% 0.3%

8 Panama 500 0 500 0% 2.9%

6 Peru 690 68 758 0% 0.9%

350 United States 80,000 8,500 88,500 7% 0.9%

1,163 Total Americas 132,278 9,735 142,013 11%

ASIA

18 China 52,200 15,100 67,300 5% 2.0%

13 Hong Kong 3,152 4,927 8,079 1% 5.5%

10 India 2,500 150 2,650 0% 0.3%

7 Israel 1,100 300 1,400 0% 1.0%

7 J apan 83,000 700 83,700 7% 2.4%

143 Total Asia 170,713 39,279 209,991 16%

1,909 TOTAL WORLD 1,118,100 165,459 1,283,559 100%

Surveys were distributed to 1,377 factors (US based and international) in January 2009. In total, 160 factors participated in the study.

1. Do we have an opportunity to grow in the Americas?

2. Why there is such a big gap in comparison to Europe

Americas USA Europe

Different currenciesFX controls (Vzla, Col, Bra)

Same currencyNo FX Controls

Same currency

No standard factoring law(import vs. export factoring)

Simple law for domestic factoring

Standard set of regulations

Low useLack of knowledge

Some use. Not so good image

High use of factoring. Well known & seen.

Increasing banking presence (Cadenas Productivas Mexico, Chile, Law 1231 in Colombia)

Low bank presenceBank Factors vs. Private Factors

Higher banking presence (lower price)

DOCUMENTATION

USA:- Perpetual notification letter to debtors- Lien (UCC1) on Sellers receivables. Clients can only deal with one factor.- Private factors vs. bank factors- Cooperation from big retailers

Latin America:- No standard documents and procedures - Domestic, Import and Export factoring can have different procedures.- No perpetual notification. Clients can do spot factoring with different factors- No UCC1 on Seller-Requirement to use local language in contracts (Brazil, Province of Quebec) - Some countries limit the ability to pay to a 3rd party such Factors (Brazil, Venezuela)- In some countries, banks have an strong presence in Factoring (Chile)

CONCLUSIONS:

• Factoring has a big potential to grow in the Americas, either domestic and international.

• As Factoring is a substitute for banking , weak (non-bankable) companies can have a tremendous benefit with a more sophisticated factoring service (example: Cadenas productivas).

•The prices of factoring is determined by the penetration of the banks in the industry (directly or indirectly).

•It would be ideal to have an standard set of rules and regulation for international factoring in the Americas

How Can you Participate

SOME RECOMENDATIONS:

•Use local attorneys in the country of origin and in the country of destiny.

•Refer / Re-factor:- Private Factors (CVCredit Inc)

- Factors such us Wells Fargo- Factor Chain

•Be part of organizations such us:- International Factoring Association - Factor Chain- Commercial Finance Association - CFA - abfjournal

Contact Information

L. Gabriel Segura

Tel: 305 792 2366 Ext. 510

Cell: 786-554-5033

e-mail: Lgsegura@cvcredit.com

1101 Brickell Ave. Suite 703 North Tower

Miami, Florida 33131

www.cvcredit.com

CONTACT INFORMATION