In 2018, Chateaudun-Crédit, a factoring broker, acquired CETRAFACT, an editor of factoring software. Chateaudun Crédit intends to facilitate factoring for its customers both in France and abroad.
Could you introduce us to Chateaudun-Crédit?
Chateaudun Crédit is the leading broker/consulting company in France and Europe specialising in factoring and its derivatives. Its job is to help the company, whatever its size or geographical location, to set up the best possible financing solution. Chateaudun Crédit advises our clients on all aspects of their factoring project: financing evaluation, choice of bank, negotiation, internal organization, IT, accounting and legal.
Who are Chateaudun-Credit's customers?
French, European and more broadly international companies.
Does Chateaudun-Crédit offers its services to companies that are not French?
Yes, Chateaudun Crédit is a French company that exports its services. This represents more than half of its activity. Our customers are not necessarily located in France. Today, we have already done factoring deals in 23 countries.
Some key figures about Chateaudun-Crédit ?
Since its creation in 2005, Chateaudun Crédit has advised more than 800 companies. As of today we have more than 4 billion negotiated financing in place in 23 countries. A team of 27 people including 5 consultants specialized in the IT aspects of factoring.
Why would a French or international group need advice on a subject like factoring? Do banks not provide this service?
Factoring is not a financing like any other, the amount of financing generated by this technique varies according to multiple parameters such as customer risk, payment deadlines, invoicing methods, collection methods and the nature of the contracts between the company and its customers.
Each bank offers its factoring services through its specialised subsidiary and each factoring company has its own risk policy, geographical locations and history.
Among more than a dozen offers, the Chief Financial Officer must choose the most appropriate one. The CFO must measure the impact of each of them in cash flow, accounting, IT, customer risk management, but also in legal and commercial matters. The Chief Financiall Officer is a generalist, he manages many subjects.
We give him the benefit of our experience. We secure his project. We do not just advise; we also manage the project right up until the first financing and we support the company throughout the duration of the factoring contract.
What is the interest of factoring for investors?
Before, factoring was known as a tool for financing the company's operations and development: it has been rediscovered for the past 5 years as an acquisition financing tool :
- facilitate payment of dividends or available reserves,
- allows the seller to be repaid of its shareholders loans before sale,
- mobilize the cash of its participation for external growth,
- refinance / restructure other debts
Factoring, securitization or receivables financing in general have advantages that are not found in any other financing method:
- the cost: between 100 and 200 bps
- the possibility of treating them off-balance sheet (deconsolidation)
- the duration of contracts (up to 5 years)
- a good resistance to shareholder change
- the confidentiality of the contract with the company's customers
Why do Investors use the services of Chateaudun Credit?
We have all the tools, methods and experience to help an investor make his financing decision: should he or she use factoring or not? Then we have the right team to manage the project within the time frame, alongside a Finance Department that is already very busy and needs advice.
When is the subject of factoring usually addressed by the Investor?
It is quite variable: some Investment Funds question us very early on, during the analysis phase. We help them to measure the financing potential that the company has on its trade receivables. The quality of customer risk, the nature of the business and the countries in which the company operates are all criteria that may affect the amount of financing available. We help investors to anticipate the strengths and weaknesses of a factoring solution for the company they want to acquire. Some Investors wish to finance the trade receivables from the day of closing: we must then launch our project the day after the signing. Others entrust us with the project just after the acquisition. Others are also interested in it when it comes to financing the first build-ups.
When, in your opinion, should the Investor be interested in factoring?
In LBO contexts, the issue of factoring must be raised at an early stage. The drafting of debt documentation must take this subject into account. Even if this is becoming increasingly rare, many debt contracts drastically limit the use of factoring.
You have just purchased the software publisher CETRAFACT: for what purpose?
The management of a factoring contract implies for the Company the implementation of new operational and technical processes and in particular the sending and receiving of data between it and its Factor.
In addition, the Company's communication with its Factor requires a continuous analysis of flows. These processes and analysis tools are time-consuming to implement and most often managed using Excel. CETRAFACT is a factoring software tool that immediately meets all its requirements. Thanks to this new service, we now cover all the Company's factoring needs.