Based in New Jersey, Eugene “Evgueni” Maftsir (formerly of Russia) directs Elbron Holdings as president. Experienced in international banking and brokerage, Eugene Maftsir employs factoring as part of his investment strategy.
A private debt approach, factoring involves a business selling its accounts receivables to a factor (external party) at a discount to the original valuation. This is important for low-cost manufacturers that require working capital in the short term but may find traditional bank loans unattainable.
As an example, a company that provides major electronics assemblers with components may have 90-day payment terms. During the 3-month period between shipment delivery and receipt of payment, bills and employees need to be paid to ensure the factory remains running.
Factoring invoices avoids the lengthy process of determining the creditworthiness of a company, as the payment due is contained on the invoice. As long as the purchasers are themselves reliable and creditworthy, there is no issue in making good the invoice amount when payment become due. At the same time, debtors do not experience a change in credit rating with this type of financing, as it’s not a debt on the balance sheet. The factoring party, which receives a discount on value in providing the loan, is ultimately responsible for securing the account receivable.
