In 1988, the turnover of Deckers Druk from Beveren-Waas came to 1 million euros.  Not at all bad for a starter, but nevertheless the firm had insufficient own funds and had liquidity problems to contend with. 

Everything that general manager Joris Deckers could present in terms of guarantees and personal sureties was used up.  A bothersome situation: the business was growing strongly, but was short of breath to make the necessary investments. 
A painful experience with a fraudulent debtor, that was the limit for Joris Deckers. He took the plunge with Fortis Commercial Finance.

Modular product
Patrick Van Eyken, Sales & Marketing manager of Fortis Commercial Finance Belgium: "The principle of commercial finance is simple: the factor takes over the debtor administration from his customer, but in practice the cooperation may take on many different forms.  For this reason, we offer commercial finance as a modular product. 

The first pillar is the debtor administration: we register the incoming payments and report on them to our customer.  This reporting can nowadays take place electronically for that matter, which saves still more time and costs. 

The second pillar of our service is the hedging of the debtor risk.  We give 100% cover if a debtor goes bankrupt, applies for a judicial arrangement or has still not paid thirty days after the due date.  The cover of the debtor risk is subject to credit limits.  These limits are determined by Fortis Commercial Finance on the basis of the strength of the debtor's balance sheet, assets, profitability and the payment experience we have had with him.”

The third commercial finance pillar is the collection of outstanding invoices: sending reminders and approaching debtors personally. Patrick Van Eyken: “A psychological phenomenon is in our favour here. People pay more readily to a third party.  But if necessary we also take responsibility for the legal collection using all available legal resources.”

And finally, there is the fourth pillar of the Fortis Commercial Finance service: financing. FCF then finances 75% to 85% of the outstanding invoice amount. “The more invoices a company sends, the more liquidity it generates.  This is a reassurance especially for SMEs.  They know that they are not making a financial drain which they will possibly not be able to fill later. 
The financing we offer them is often financing without recourse: we pay the funds into their account and cannot then demand them back if the debtor does not pay.”

Which commercial finance formula the customer chooses depends on his situation.  He may have the formula vary according to categories of debtors or countries.  Some customers only want debtor administration, whereas others also take for example financing or risk cover.

Deckers Druk: commercial finance as a motive force
Deckers Druk opted for the complete package: commercial finance as a motive force for growth, administration, collection, risk cover and financing.  Deckers Druk's customers are mainly mail order firms and magazine publishers.  Deckers is one of the top 50 Belgian printing houses.  The majority of customers are in Belgium, but increasingly often Deckers also works for the French and Dutch markets.

Joris Deckers: “Thanks to factoring, the average time for our invoices to be paid has fallen from 107 days to 65 days. We do not need to worry about our repayment capacity.  This is usually contained in our debtor portfolio.  The sword of Damocles which hung over our firm fifteen years ago has gone.”

Patrick Van Eyken: “That is the good thing about commercial finance.  You know exactly on which date you have these funds available.  To start, there is the financing: you send an invoice and the day after the money can already be in your account.  If a debtor appears to be insolvent, you know for certain that you will nevertheless see your money ninety days after the due date at the latest.  This in fact is convenient for cash planning too.”

Vitality
Joris Deckers can show very good growth figures: his turnover rose from 1 million euros in 1988 to 14 million in 2003. “Growing turnover on the one hand requires more liquid assets and more investments, but on the other hand creates an ever larger volume of outstanding claims.  Without the help of our commercial finance partner, we could never have bridged the gap between the two.  One of the strengths of commercial finance is consequently the vitality which such an agreement offers. As a result of the fact that we have worked with factoring, we have always been able to keep our bank facilities - our possibilities to enter into loans - open for investments or takeovers.  We have never had to use them to finance our own growth.”
An approach which pays, as Deckers Druk was able to act very quickly when an interesting opportunity cropped up.

Debtor risk
Joris Deckers tells the story of a textiles firm, one of his first customers. “I was honestly proud about the sale I made there.  Subsequently it appeared to be pure fraud in which we lost nearly 175,000 euros.  In the early days of our business, this caused tremendous pain.” 

Patrick Van Eyken: “It is naturally difficult to be critical towards a customer with whom you have built up a relationship of confidence over the years, but such a relationship in itself is no guarantee of creditworthiness.  You can have good relations for twenty years with a customer who pays on the nail. And then in the twenty-first year, this customer is confronted with a serious problem.  He goes bankrupt.  Who then has to pick up the pieces?  We help our customer to objectify the relationship.  We take on the tedious side of communication - debt collection and determining the credit limits.  Psychologically, that is easier to accept.  Call it outsourcing of less pleasant communication.”

The costs and benefits
Anyone who only looks at the costs side says: 'Commercial finance is expensive'.  If you also look at the benefits, the picture looks entirely different.  The factoring fee is calculated on the basis of three components: the total amount of the invoice, the mean amount per invoice and the number of debtors.  In addition to this, there are the interest for possible financing and the costs for determining credit limits.  On the benefits side, we see lower costs for administration and personnel, prevention of debtor losses, shorter payment periods and discounts from own suppliers because the customer can pay cash more easily. But it is difficult to put a figure on the greatest advantage of commercial finance. Joris Deckers: “The fact that I do not have to lie awake about these payments is worth a great deal to me. My debtors are hedged; I can
assume from this that everything is paid.  I can look forward without hindrance and run my firm without too much worry.”

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Fortis Commercial Finance
Fortis Commercial Finance is the Fortis group unit specialising in debtor management, credit searches, risk cover and funding of outstanding invoices.

Fortis Commercial Finance has extensive international experience. Fortis Commercial Finance serves the needs of its customers from units in Belgium, the Netherlands, France, the UK, Germany, Italy, Hong Kong and Luxembourg; more than 80 % of its customers are involved in international trade.

Fortis Commercial Finance is affiliated to Factors Chain International (FCI), a world-wide organisation of factoring companies that work together.