Receivables Discounting (With Recourse)

Discounting of the client's receivables due in the future by the bank.

Receivables discounting is intended for:

• entrepreneurs
• natural persons and corporate  entities
• clients authorised to do business in the Czech Republic
• clients who actively do business
• clients with a tax liability in the Czech Republic
• clients who can be loan recipients pursuant to the pertinent legal regulations
• clients who supply their goods, services or construction work with deferred payment

Characteristics of Receivables discounting:

• assignment to Komerční banka for consideration of a client's receivables due in the future, which were created in terms of commercial transactions
• purchase of receivables with recourse to the original owner
• receivables can be insured by a selected insurance company (e.g. EGAP, KUP EGAP) against the risk of non-payment
• the following receivables are discounted:
  • short-term
  • medium-term
  • long-term (depending on the level of risk assumed and the nature of the receivable)
• minimum maturity: 45 days
• lower value limit of receivables purchased: approx. CZK 1 million, or the equivalent of this amount in foreign currency
• the price for discounting is set individually and especially depends on the following:
  • the financial standing of the debtor
  • the value level, maturity and nature of the receivable
  • all fees are usually deducted from the amount paid at the moment the receivables are discounted

The functioning of the product can be seen on the following diagram:

Example of purchase of receivables insured by EGAP

1 – Commercial contract
2 – Insurance contract
3 – Contract on assignment of receivables for consideration
4 – Delivery of goods or services
5 – Notification of receivables, payment of the insurance premium
6 – Purchase of receivables, payment of the supplier
7 – Settlement receivables
8 – In the event of non-payment, recourse against the client, claim against the EGAP insurance policy

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