Today, many Ukrainian companies record a significant drop in revenue and deterioration of payment discipline of counterparties whereby it is extremely important for business to have access to short-term credit. As a consequence, currently corporate customers are very interested in working capital financing instruments and in covering short-term liquidity gaps. Among such instruments are: overdrafts, factoring and credit lines.
Overdraft is an effective instrument for closing short gaps of current liquidity. It allows the customer to obtain easy and quick access to loans and thus, to avoid delays in settlements with partners. Overdraft allows to reduce the cost of interest payments as the repayment is done automatically through the daily income to the current account of the company, as well as to obtain additional funds without providing collateral. The overdraft limit is calculated in proportion to the amount of funds transferred to the account of the client.
Another popular instrument, which today only a few banks can offer, is factoring. Factoring services can be helpful to those companies that want to speed up the turnover of working capital, effectively manage accounts receivable and reduce business risks. Thanks to the factoring the client can not only obtain the necessary funding for his business, but also an opportunity to increase its volume by increasing trade credit for debtors. An additional benefit of factoring lies in improving payment discipline of debtors since the practice shows that debtors pay customers more accurately when they know that their debt is transferred directly to the bank.
The future belongs to integrated solutions for clients and their counterparties
At present, many domestic companies have already used almost all available instruments in order to optimize internal processes and improve performance. Further optimization is possible only thanks to the optimization of processes within the value chain, in which the company operates.
Hryvnia is in the priority
The unstable situation in the country and economics significantly complicates forecasting and planning of activities in the long term for businesses. As a consequence, analysts from FIDOBANK record the trend of declining interest from the business side to the investment credits.
Nevertheless, this kind of resource is still in demand. Companies are interested to invest in reducing energy consumption and the use of alternative energy sources, but today banks cannot fully satisfy their investment needs due to the lack of long-term resources.
Another notable trend in recent months – many representatives of the corporate sector refuse from foreign currency lending due to rising risks. Causes: accelerating devaluation of the hryvnia, currency deficit increase due to the decrease of volumes of returning export earnings to the country and the increasing complexity of the purchase of foreign currency in the interbank market. As a result, borrowers prefer to use more expensive but, at the same time, more predictable crediting in local currency. Such customer preferences led to the decrease in the Bank’s portfolio of foreign currency loans.