VTB Factoring, a subsidiary of VTB Bank, has launched an online factoring platform for SMEs in Russia.
GetFinance automates the entire supplier onboarding process, making the cycle of processing and financing factoring transactions fully digital. Suppliers can enter into factoring contracts remotely as well as receive early financing for completed stages or fully completed contracts.
The platform targets the public procurement segment, which VTB says comprises 500,000 SMEs, with more than 4 million concluded contracts and potential commercial online financing at RUB1tn a year. There is no minimum transaction amount, and the company says that it takes less than a day from the moment the supplier files an application to the moment when the funds are credited to the account.
“GetFinance platform is an independent digital aggregator with a main mission to help small suppliers and large buyers to organise mutual settlements within the framework of the public procurement system,” Corneliu Robu, head of client relations at VTB Factoring, tells GTR. “The key difference and advantage of this system is that it provides fully digital remote onboarding for suppliers and buyers. This means that hardcopy document flow is completely absent even during the stage when clients join the system and sign the first contract.”
The platform is a simple matching application, whereby a supplier registers in the system, and fills out an application for funding. This is then sent to the factors that have joined the platform, who then send offers to the supplier. The supplier chooses a suitable option, and accepts the rules for the provision of services through an electronic document signature. Next, the supplier loads the register which is supposed to be financed and awaits confirmation from the buyer. The factor then transfers money to the supplier for the confirmed supplies, and after the agreed deferral period is over, the buyers transfers funds to the factor to pay off the debt for accepted deliveries.
“With the GetFinance platform, companies will get paid for completed contracts quickly and in a convenient online format, improving their working capital and reducing the risk of cash flow gaps. It will also help deal with many difficulties in the mutual settlement between all parties in commercial transactions. The GetFinance service will immediately become available to all current and future clients of VTB Factoring, and thereafter, to other users of GetFinance as a new marketplace for commercial online financing in the Russian Federation,” says Anton Musatov, CEO of VTB Factoring.
“The idea behind our platform is to offer the market the simplest and most effective solution to the problem,” adds Robu, who explains that, unlike other new supply chain finance platforms in the Russian market, GetFinance does not use blockchain. “Due to the fact that working in the public procurement system implies acceptance of deliveries by the buyer and there is no supplier credit risk, the factor does not need to carry out enhanced verification of deliveries. This means that there is no need for systems of distributed registries or blockchain which serve for verification purposes.”
While VTB Factoring will be the backbone factoring company for the platform, the eventual aim is to create a marketplace to bring in other industry players, which will enable suppliers and buyers to receive the most favourable financing terms as well as fulfil antitrust legal requirements around the selection of a financial services provider.
Robu tells GTR that VTB Factoring is currently in active negotiation processes with the largest Russian companies, including clients of the VTB group, to ensure they join the platform.