Forward Flow Agreement Npl

April 9, 2021

To achieve a sustainable solution, it is important to focus in particular on pricing. A fair price agreement for both partners is the basis for a long-term partnership. The key word in this context is “transparency.” The company and its potential business partner should first have a common vision of the factors of influence that determine the value of the receivables to be permanently divested. This includes, for example, information on: FF`s advantage is the ability of both partners to obtain the best possible price and the best contractual terms in the long term. They can also plan and budget their financial flows. Finally, and not least, this type of agreement saves a lot of time and effort to prepare each transaction and each auction for the sale of outstanding debts. Ideally, this leads to the “win-win” situation described by Van Nieuwenburg. And this ideal situation is the rule. In Belgium, EOS Contentia is already considered a major player in the market, says Van Nieuwenburg. Currently, it is mainly telecommunications companies, e-commerce companies and energy suppliers that use the forward flow process to monetize their non-performing debts.

Nevertheless, Van Nieuwenburg is confident that I expect the volume of business to increase over the next few years. When a financial institution has a FF agreement, it regularly rejects loans considered non-performing to its partner. Otherwise, the bank or non-bank company without FF is required to package outstanding loans into separate portfolios and arrange offers to sell them. Organizing the auction takes time and effort and the price obtained is generally less than face value. B2Holding offers the purchase of invoices by inter-credit in Norway, Interkredit in Sweden and OK Perintto in Finland. When a customer buys invoices, the receivables have not yet expired, which guarantees the customer a stable cash flow, while B2Holding manages the invoice. In order to conclude a cash flow agreement with EOS Contentia, the distribution company determines the loss of receivables it wishes to sell at which intervals and also provides data on these outstanding receivables. “This phase is crucial,” says Van Nieuwenburg.

“The more data we have, the more we can calculate the price of debt.” Indeed, it is mainly on the basis of this data, treated anonymously and in accordance with data protection, that the team determines the purchase price of the debt portfolio. Pricing is complex and includes several colleagues from different departments in Belgium and risk management at EOS in Hamburg. “The outcome of the agreement depends on our analysis and calculations,” says Van Nieuwenburg. This agreement confirms our partnership with one of Europe`s largest consumer banks and we are proud that they have trusted Hoist Finance as their preferred partner in helping them deal with unsecured consumer credit bad debts over the next 18 months.