Company profile and market:
The company focuses its activity on the execution of large civil works projects in Spain, Europe and Latin America.
Companies in this sector have high needs for financing lines for working capital and guarantees. They are usually under review by banks due to the high volumes of risk approved and the sector's historical default. Both are reasons for alternative and complementary financing.
In 2016, the construction sector expected increases higher than the increase in GDP, close to 5%, thus recovering levels after seven years of recession, while the banking sector was already immersed in a process of concentration of institutions.
Strongly supported by the banking sector, as part of its financial plan it had detected the need to broaden the typology of financial providers of working capital lines, in order to mitigate the effects that could be caused by the concentration of the banking sector and thus continue to have sufficient lines available to support its activity and the expected increase in business.
This is why this company relied on Finalbion's alternative financial solutions in 2016, requesting Reverse Factoring (Confirming) lines for its Spanish suppliers.
The Finalbion Proposal:
With the Reverse Factoring line approved by our entity, the company achieved not only its diversification objective, but also freed up the financing capacity it had in confirming lines with banks, and redirected this bank debt capacity to new lines of guarantees to support new contracting in Spain and abroad.
The company has been operating with Finalbion since then, having financed more than EUR 129 million to more than 600 suppliers through our lines, managing payments of more than EUR 160 million and relying promptly on our recourse and non-recourse factoring capabilities.
The challenge with this client in 2016 consisted in incorporating us as a non-bank financing solution to the custom of payment by bank confirming that the suppliers of this large company were already familiar with.
Thanks to the effective communication capacity with suppliers by Finalbion's Customer Service team, and the simplicity and operational security of the technological platform, we were able to integrate commercially and functionally as a new solution for suppliers, widely accepted by them, thus supporting our client in its strategy of diversification and efficient use of its bank debt capacity.