Accounts Receivable Solution Suite

Serviced by:

TRANSFAC CAPITAL, LLCThe Brand of Experience

• 1.221 Trillion € world wide in 2008 1

– UK accounted for 18.9% of that volume– US is 5th largest factoring country at 8.03%

• $136 Billion factored in US in 2008 2 • Part of $600 Billion Asset Based Lending

Industry• Factoring has consistently grown since

1976

1 International Factoring Group’s Global Industry Activity Report 2008 2 Commercial Finance Association’s Annual ABL and Factoring Survey, 2008

Factoring Industry

Simple Funding Example:Day 1Invoice Submitted: $1000Advance from Transfac (85%): $850

(normally next day)

Day 40Check received by Transfac: $1000Advance repaid: ($850)Transfac Fee(~3%): ($30)Rebate to client: $120Total Proceeds: $970

What is Factoring?

Credit ContinuumProducts

Price

Borrower Credit Strength

weakest

lowest

strongest

highest

Factoring A/R Line ABL Line of Credit

Debtor Credit Strengthhighest N/A

Liquidityhighest lowest

Lending

• Underwriting:– Collateral– Capacity/Capital

• Debt coverage ratio• Debt to equity• Current and Quick ratio• History of profitability

– Credit• Company/borrower• Owner(s) of company

– Character – Conditions (is it a viable business now)

Lending

• Servicing/Collections:– Monitor payments– Covenants - Monitor financial statements– Minimal labor to service– Collections/work out if problem

• Underwrite Quality of AR– Debtor quality– Concentration of customers

• Billing/collection process – Dilution – Bad Debt

• Positive notification to debtors• Verify invoices before fund• Light collections• Reserve

Factoring

Sources of Repayment1. Debtor

– Manage debtor credit– Notice of Assignment– Verify product or service delivered

2. Reserve3. Client (company)

– Ability to run business– Integrity of owner / management

4. Additional assets (inventory, other equipment, etc.)

5. Personal and corporate guarantee

Factoring

AR Solution Suite

• AR Assist

• AR Partner• AR Referral (including Referral Network)

AR Assist

• Bank’s Loan Decision• Transfac services

– Underwrite package - Transfac service prices– Underwrite debtors (suggest limits)– Notify Debtors / Verify invoices (percentage

determined by bank)– Input/upload invoices schedules from client– Collection of invoices– Lock box (if needed)– Cash application of each invoice– Monitoring each invoice– 24/7 online reporting for bank and client

AR Partner

• Bank/Transfac client origination• Transfac

– Underwrites– Funds– Services

• Bank participates in percentage or fixed amount of facility– Fee income settled monthly– Performance reporting

• Bank keeps deposits

AR Refer

• Bank turn down referred to Transfac– New applicants– Work outs or non-renewals

• Transfac funds and services• Bank can reinstate any time• Referral fee paid monthly for life of

account• Referral Network for non-Transfac

deals

Underwriting-AR Assist

• Prospect sheet• Application, customer list, AR aging and AR

Questionnaire, simple financials, simple write up• Transfac provides servicing proposal within 24

hours• Bank/client accept• Transfac completes underwriting suggestions • Submits to bank/client for approval and Process

Rules• Servicing agreement with client• Bank’s loan documents (if needed)• Works with client and bank to set up

AR Assist Set up

• Set up check list

• Addendum to servicing agreement– Debtor limit signoff– Verification agreement– Collection agreement– Lock box/cash application agreement– UCC Monitoring agreement

AR Assist Daily Funding

• Invoice schedule from Client to Transfac

• Transfac inputs schedule

• Bank sees availability– Client Summary– Collections

• Bank transfers money to client’s accounts

Example: Bank $10,000 face amount of invoices

DebitCredit

Client’s Commercial

Loan Account Ledger: $10,000

1.5% Service Fee to Transfac: $150

10% to Client’s Reserve Account: $1,000

Remainder (88.5%) to Client’s DDA:$8,850

Example: $10,000 of invoices pay in 40 days

DebitCredit

Client’s Commercial

Loan Account Ledger: $10,000

Bank interest (ex 12%APR):$131.51

Interest Cost from Client’s Reserve: $131.51

Transfer Reserve to $868.49

Client’s DDA: $868.49

Marketing

• Review of current portfolio for good candidates

• Turn downs of applicants

• New Product offering of Bank

Training

• Transfac operations works with designated bankers to work with current loan approval process

• Understand reports, schedules, collections, and cash application

• Transfac available to work with any client bank decides

Bank Benefits

• Keep clients– Additional loan revenue– Deposits– Service of term loans

• Work out deals

• Decrease risk

• Decrease labor

• Increase Offering

Transfac Advantage

• Experience– Management from several large factors and banks

with decades of experience – Account Executives over 10 years at Transfac

• Reliability – Bankers, CPAs, Attorneys trust their clients with

Transfac– Several clients 5+ years with Transfac (rare in

factoring)

• Responsive– Clients and referral sources get timely answers– Proposal within 24 hours; funding in 72 hours

• Service: More than money