A supplier becomes a customer of ETFL following careful evaluation and requests specific limits for its clients to whom it intends to sell goods/services on credit.
ETFL secures limits from Euler Hermes on the buyers (debtors). When a supplier issues a credit invoice to its approved buyers, it then assigns the invoice to ETFL against which ETFL provides 85% immediate funding to the supplier. On maturity, the debtor needs to pay the full invoice amount to ETFL. If the debtor fails to settle the invoice, ETFL submits a claim with Euler Hermes and secures 90% of the invoice value. Since ETFL gives only 80% funding to the supplier, its risk is fully covered.
Once the trade finance facility is provided, ETFL issues bonds with 6 months maturity and offers investors the opportunity to invest and participate in the return generated from its trade finance activities.
The ETFC bonds are identified with ISIN CY0149252112.
In the case of the “Recourse” Bonds, ETFL Credit and Risk Committee grants the credit limit after careful evaluation of the Supplier and its debtor diversification, taking also into account the financial strength, gearing and other financial ratios of the supplier.
After the limits are approved, the supplier invoices its clients on credit and assigns the invoices to ETFL for discounting.
If one or more of the debtors fail to settle their obligations to ETFL, the uncollected amounts are deducted from the available balance of the supplier pertaining to other debtors. This explains the right of recourse on the supplier. If the supplier does not introduce new invoices, ETFL will collect the outstanding balance from the rest of the debtors and claim the remaining balance from the supplier, including taking legal action if the outstanding is not recovered. If the supplier has become insolvent, in that case ETFL would be treated as a creditor.
The ETFR bonds are identified with ISIN CY0149252113.