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Know Your Customer (KYC)

KYC guidelines have put in place international minimum standards for verifying the identity of new customers with the aim of combating money laundering, criminal schemes, economic crimes and terrorism. Before opening an account for a new customer, banks are required to verify the customer’s identity, examine their business model and identify the origin of the funds. If the customer is a natural person, the type of the customer’s occupation and the purpose of the business relationship must be recorded. If the customer is a legal entity, the required information includes, among other things, the type of company, business activity, industry, industry code, number of employees, ownership and corporate structure as well as the most important financial ratios. Furthermore, the origin of funds and assets must generally be identified.

Logistics vs. supply chain management 

Both logistics and supply chain management deal with the organisation of object flows along the supply chain. Both are aimed at increasing customer benefits (effectiveness) and achieving system-wide improvements of the cost-benefit ratio (efficiency). But modern supply chain management goes a step further. It includes the structuring and coordination of autonomous business units within a value chain in its analysis. Supply chain management thus takes a cross-company perspective of all business processes and connects all areas of business administration, such as purchasing, production, distribution, marketing, controlling, etc.


EDI (Electronic Data Interchange) is a key technology to optimise B2B processes along the supply chain. Business documents are exchanged electronically across companies, industries and borders to lower costs, speed up transactions and reduce errors.

The goal of this technology is to automate business processes while avoiding manual and paper-based transactions. Among other things, EDI is typically used to exchange order information between trading companies and manufacturers. In addition, it is also used for invoicing purposes, which allows for electronic invoices to be transferred, reviewed and processed in real time.

An electronic invoice is an electronic document equivalent to a paper invoice in terms of content and legal status. Switching from paper to electronic invoices helps to streamline corporate accounting processes considerably and to reduce costs. Moreover, it opens up new opportunities, such as automatic financing of accounts receivable through e-discounting.


A blockchain is a decentralised database distributed across multiple servers that is immune to manipulation or hacking. What exactly is fed into this database is of secondary importance – it may be a financial transaction, a contract, a share or a purchase agreement. Any change in the database is stored and transparently recorded in so-called blocks. Every block is verified and sealed, thereby securing any information, transaction or change and making it visible to everyone.

Blockchains are applied in a variety of contexts and are relevant wherever traceability and transparency are major concerns, such as in the area of contracts, copyright, taxation and financial transactions.

Supply chain finance 

Supply chain finance is about identifying financial aspects in the supply chain and optimising them in terms of capital cost. 

It consists of optimising financial structures and financial flows across corporate boundaries to maximise the profitability of individual or multiple companies within a supply chain. 

Alternative forms of financing

How do I ensure my liquidity and, by extension, the continued existence of my business? This is one of the key questions every business faces. As lending policies become more stringent, it’s time for new ideas.

Tighter lending policies by banks in the context of Basel III, the effects of globalisation, increased competition across many industries and more late payers present new challenges, especially for medium-sized companies. Alternative forms of financing such as factoring, leasing or crowd sourcing offer welcome alternatives to classic bank financing and provide liquidity outside the usual channels.


Forfaiting is the sale of accounts receivable to a third party who also assumes the associated risk of non-payment. This type of selling accounts receivable is typically used in export financing.

Forfaiting and factoring are therefore fundamentally similar in that they both involve selling accounts receivable to a bank to optimise cash flows within a company. This has a positive effect on the company's liquidity, balance sheet and other areas.

Factoring and forfaiting do, however, differ in detail – to give just two examples: forfaiting agreements are made on a case-by-case basis as opposed to factoring, while the acceptance of payment risks by a factor is only optional rather than the rule.

Debtor management

A debtor is a term used in accounting to describe someone who owes money for goods or services received.

Contrary to cash sales, where payment is made upon delivery of the goods or provision of the service, open account transactions carry a certain risk. This credit risk impacts the seller’s balance sheet until such time as the invoice is paid. Factoring helps reduce this risk, as accounts receivable are purchased and the money is immediately credited to the seller’s account. Upon request, the factoring bank also handles debtor management and assumes the risk of non-payment.

Del credere

Del credere is a term used to describe the risk of bad debt losses such as the risk that one of your customers fails to pay your invoice. This risk can be covered under a factoring agreement upon request.

In addition to immediately converting accounts receivable into liquidity, factoring offers another clear advantage: it provides insurance against payment defaults. For businesses, this means that the insurance deals with any customers who are unable to pay.


Companies often have to accept delays because more and more clients or customers tend to pay late. Proactive receivables management helps to optimise cash flows and ensure the company's liquidity.

Factoring is an arrangement in which a bank buys a company's accounts receivable and immediately pays an advance of up to 90 %. The remaining amount is transferred as soon as the customer has paid.

This makes factoring an attractive form of financing for all companies with fluctuating sales, high outstanding accounts or long payment terms.

The costs of this added security and flexibility are often compensated by cash discounts earned from suppliers.


In business administration, liquidity means the availability of sufficient cash.

Along with excessive debts, poor liquidity is the most common cause for companies to declare insolvency. Even companies with well-filled order books may experience a lack of liquidity, for example if customers fail to pay or fail to pay in good time, while the company incurs liabilities that must be settled, e.g. for the purchase of raw materials or the repayment of loans. Poor liquidity also limits a company's room for manoeuvre when it comes to strategic planning, for example by preventing it from taking advantage of cash discounts. Factoring is an instrument to ensure liquidity through which a company receives money for goods delivered or services provided even before the customer has paid.


Which activities belong to a company’s core business and should be kept in-house? And which tasks could be improved or made less expensive if they were outsourced? These are two key questions to ask when it comes to outsourcing.

Outsourcing is the practice of hiring external third parties to perform certain corporate tasks. The involvement of better qualified and more specialised suppliers of components and services in the value chain often results in significantly reduced production, development or service overhead costs.

In the context of factoring, the outsourced task is debtor management, which holds clear benefits for businesses.

Balance sheet contraction

Balance sheet contraction means that the assets side and the liabilities side of the balance sheet shrink by the same amount (both sides contract), which results in a lower balance sheet total.

This happens when cash on the assets side leaves the company while trade payables decrease by the same amount.