Marina Balan, product owner of Unsecured Micro band at maib, told in an interview for Pavel Zingan about maib's factoring service, dedicated to businesses in the Republic of Moldova.
Marina, initially, I thought we would discuss factoring exclusively, but from your team's name, I understand that the area of activity is much broader.
The concept of unsecured loans is certainly broader than just factoring. In 2023, maib launched such a product as part of its partnership program, with a zero interest rate for legal entities.
With a zero interest rate? I know of another loan product - maib liber - when you, as an individual, can buy goods and services in instalments without interest, but the bank gets its benefit from the program partners.
Under the Impulse partnership program, the interest-free loan works on the same principle. We have partners who sell farm machinery, plant, computer equipment, computer hardware, Apple, agricultural seeds, and agrochemicals - there are many positions. We refer the bank's customers to the partners, ensuring they get increased sales, and the customers, in turn, get interest-free instalments for three, six, nine or twelve months. The bank's financial interest is embedded in the partner relationships.
If I'm a company that wants to buy a tractor or a MacBook in installments, would it make sense to see maib's list of partners for this program?
Hundred per cent. Plus, we already have over thirty partners in this program. A section on the bank's website is dedicated to all the partners in this program.
Are you satisfied with the results of the zero-interest partnership program for legal entities?
Absolutely. The product worked well in the first quarter when it was the season for agricultural purchases. Then, there was a seasonal drop in applications, which we have remedied and started diversifying the range of partners to balance it according to seasonal fluctuations. Thus, the list of partners has been extended to include sellers of equipment, computing equipment and solar panels.
Let us focus on factoring. Can this be considered a new product? Did it appear in Moldova a long time ago?
Factoring has been on the market for a long time. Banks have been and are engaged in factoring, and specialised financial organisations deal exclusively with it. Maib was also involved in factoring, but as of 2018, it has ceased any activity related to it.
Can we talk about a relaunch of factoring?
Or rethinking it. First, although factoring services exist in Moldova only for export operations, we decided to focus on the local market. Secondly, we chose not to create a product and enter the market with it but to do the opposite - to identify the needs of customers who might be interested in such a product, to analyse their needs and to create a product based on customer experience.
Did it work?
We were not only able to gather good analytics and study the user experience in depth with our customers, but we simply fell in love with the product. Now, we can only wonder why local factoring hasn't become a widely used product yet and work to make it known and loved by as many businesses as possible, explaining how it works.
From what I remember when I worked in banking, factoring is buying invoices issued by a company with a particular commission charged. Is this true?
Yes. You need to be a supplier of goods or services, and the contract must provide for delayed payment by the buyer. If so, we can pay your invoice, which is factoring. You receive the money immediately, and maib gets the right to receive payment from your buyer when the due date for payment stipulated in the contract arrives.
So invoices in advance, barter or overdue invoices are not subject to factoring?
No. Only invoices for which the contract provides for delayed payment.
For example, when providing services for clients such as Orange or Moldcell, it is written in their main contract that they pay for my services in 30, 60 or 90 days. I want to be quicker, but the desire to get such a client often outweighs the fact that I must wait for the money for a more extended period. Could I approach maib for a factoring service?
Exactly. By the way, our test client was a large printing company with a similar working practice. Many advertising polygraphic products are also paid for with a set delayed payment. But if we're talking directly about the node of interest, it's food retailers. Almost all the big chain stores pay for goods with deferred payments. This is their working principle; either the company accepts these terms, or they don't make it to the shelves.
What instalment period is maib factoring currently focusing on?
Up to 90 days.
And the amount of the fee?
It depends on the deferment period. 1.5% - for payments up to 30 days, 2.5% - up to 60 days and 3.5% - up to 90 days.
As a factoring customer, I receive the money immediately, but my buyer is already paying the money to the bank? How will they find out about this?
Once we have bought the invoice, we become, by law, equal successors. We inform the buyer, who repays the debt directly to us. And, in case of late payment, we solve the situation independently with the payer. But, as a rule, this does not happen because the bank, before deciding on factoring, studies both parties to the contract, the history of their relationship and the payer's financial situation.
What are the steps to benefit from the product?
If a customer needs factoring, there are three ways to get it. They can apply online on the bank's website, go to a maib branch or call their relationship manager if they already have one assigned. The request is processed, the customer is set a limit of factoring transactions for one year. Then, depending on the need, the customer, without collateral, simply presents the invoices to the bank and gets the money immediately in the account.
When did maib start offering factoring services?
In July, we had the experience of working with our first client. As they say in start-up businesses - we tested a minimum viable product (MVP). We paid the first five invoices and analysed all the business processes involved in this activity. We modified, adjusted and went to market with the product. Now, our customers can benefit from factoring services and have their working capital back on their account within two hours. That's of fundamental importance. Compare two situations: you have produced a batch of goods, shipped them and are waiting 90 days, or you have shipped the goods and immediately received cash that you can use to pay salaries, purchase raw materials or make urgent payments.
What is the dynamic of the new service?
So far, we have already paid over 150 invoices. The current task is to popularise the service so that as many companies as possible for whom it would be useful find out about it.
That's what it means by today. But knowing maib, do you have strategic plans for factoring?
We do. Next year, we will continue to work on creating a factoring platform where a company can log in independently, open a personal account and simply upload invoices for payment. And we, in turn, will also build a cross-payment system.
