Servicios - Fentro S.A.

Review of General Balance
This study consits in the integral review of each countable account, either passive or active, as well as a study on the patrimony. It offers alternatives with solutions thereafter.

Revision, Optimization and Cash Flow Control
The study consists in an integral review of the processes that the company uses so to determine and control Cash Flow, as well as to look for alternatives in order to be able to make recommendations for improvement. Sources and uses of cash are studied, as well as how to prepare a financial report and how to establish priorities and appropriate control processes.

Revision and Optimization of Inventories
The purpose of the study is the correct identification of inventories and the search of alternatives so to transform them into a source cash. Obviously, it is expected to identify the effects in results that this study would cause.

Revision, Restructuring and Collection Accounts Control
Portafolio’s straucture is analyzed, considering it as the main source of cash. It consists in an integral examination of the quality, terms, interest and duration. A proposal of procedures of qualification of credits and controls is provided, as well as, if considered necessary, a proposal of restructuring programs which have been previously established. All this, after an analysis of the effects that this kind of a process has in results and in the General Balance.

Restructuring Passives
For passives, we look for convenient solutions for the company taking into consideration its cach flow, actives currents, productive actives, as well as all the guarantees.

Budget
Elaboration, projection and implementation of the global budget of the company as an administrative tool of managerial control.

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Consultancy in Administration of Portafolio

Outsourcing of Collections
It begins with the analysis of potential clients' credits , followed by the documented instrumentation of the credit. Then comes collection administration at home and ends with legal actions in the event of default.

Diagnosis of the Situation of the Area of Recoveries
The study allows to establish the real situation of Portafolio, showing which are the weaknesses of the process, its level of risk and suggesting corrective policies to be applied, according to the case.

Elaboration of Plans and Strategies of Recovery
We establish some action plans so to maintain a Portafolio type A, that would allow the company to maintain a higher standard of profitability.

Implementation of Suggestions
In this stage an action plan will be made in which all the activities related to the recommendations given will be carried out, including people in charge, and expiry dates to do this action plan. Additionally parameters will be established in order to be able to measure the results that are expected; and, if it is aplicable, corrective measures will be adopted to carry out the implementation in a successfull way.

Elaboration of a Collections Manual
We will suggest a collection’s manual that would guide on the different levels of the area of collections so that it would be able to adopt decisions according to the policies and control procedures established. This handbook would include the mission, vision, flowchart, functions, policies, procedures, models of communications, forms and training guide.

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Legal Consultancy

Our company has a strategic alliance with the legal firm ”Cassinelli Valero”, which has a wide experience regarding legal issues.

The main vision of Cassinelli & Valero has been to position itself as a legal firm that offers personalized attention to its clients. It dedicates itself to satisfy what they might need so to assist them completely with their legal requirements.

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Forfeiting

What is Forfeiting?

From the exporter's point of view, forfeiting or discount without resource consists in the sale of some financial documents, with middle term expiry dates, related to the payment of goods and exported services, without resource against the exporter.

The operation is carried out at a price that represents the present value of due dates documents, being up dated.

This technique, quickly done, is characterized for being:

• Abstractable: whichever documentation is used, it has to allow the separation between the rights acquired with the purchase of the financial document and the commercial operation that originated the issue of the document. This means that neither the debtor nor the bank guarantor can use non payments, commercial disputes or any other incident as an excuse to impeach the payment of the debt.

• Negotiable: the credits object of an operation should be freely transferable.

• Commercial: in a forfeiting operation the credit arises as consequence of a contract of purchase and sell of goods. It is therefore qualified as a commercial credit.

• Without resource: once concluded the operation, the seller can totally ignore the events that affect the credit. If debtor doesn't pay, the buyer doesn't have any possibility to return the credit to the seller, unless it is a fraud.

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Financial Documents Used

Being a definitive sell, the financial documents used must have an inconditional and irrevocable promise to pay. The most frequently used are:

• Promissory Notes.

• Letters of Exchange.

• Letters of Credit with term payments, preferably with acceptance.

However, they could also be discounted without resource documents such as comercial bills, collection rights on supply contracts, etc., whenever they offer, with enough certainty, the right to demand the payment of an obligation at its expiry or due date.

Promissory Notes as well as Letters of Exchange are endorsable; which, at its simplist form consist in the beneficiary's signature in the document’s back. The endorsement without recourse transmits the right to receive the payment of the letter, but not to appeal the seller in the event of default.

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Guarantees

In the great majority of the operations discounted in the forfeiting market some form of bank establishment is present. This allows to reduce the credit risk and to speed up the process of analysis of risk of the one forfeiter and, at other hand, it allows to increase the degree of liquidity of actives in the secondary market.

Nevertheless, a growing number of companies, big corporations, very well-known in the international markets, are names broadly accepted nowdays and do not need any kind of additional guarantee .

Forfeiting is suitable when it is:

•Inconditional,

•Irrevocable,

•Transferible.

It is important that the text of the document shows no doubts about the validity of the obligation and that the guarantee is legally valid.

The document most frequently used in the forfeiting market is a guarantee.

An alternative to a guarantee is a bank guarantee that is issued in a document separated from promissory notes or letters. Each bank usually has its own format, and the text can be some few lines or one of several pages where several legal aspects might be considered in detail.

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Cost

The elements that usually are part of the cost of an operation of forfeiting are:

• Discount fee. It is quoted as a margin above the rate Libor. It depends on its duration: 6 months, 1 year, 18 months, etc.

• The days of grace or number of days that the forfeiters adds to each due or expiration date in the calculation of the discount.

• The Commitment Fee it is the price that the forfeiter requests to reserve credit lines and of risk country, sufficient enough to be able to make a certain operation under certain conditions. Although there are not precised or fixed norms, Commitment Fee is usually around 50% of the margin.

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Methodologies on Discounts

Commonly used Methodologies on Discount in the market of forfeiting are two:

• Straight discount: the present value of the discount is calculated deducing the interest of discount of the nominal value of the credit.

• Discount to yield: the discount is applied on the quantity given in advance.

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Why the Use of Forfeiting

From an exporting company point of view, forfeiting helps reaching these objectives:

• Liquidity.

• Reduction of the credit risks and those derived of the exchange rate or interest.

• Maintenance of the credit lines with banks.

• Improvement of countable ratios.

It is important to consider all these characteristics when comparing costs in financing alternatives. In small and medium size companies, forfeiting might be considered expensive because the cost of it is compared with the cost of discount of letters with resource which are often offered by their usual bank.

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When and How to Use It

For certain operations, the use of forfeiting as an alternative of financing is not viable.

Operations under 500.000 dollars are not very attractive for many forfeiters, mainly when the number of due-dates is high. Not only because of the limited potential of benefit, but also because of the difficulty in covering the risk of interest and the high administrative cost. Even if there is a good offer, the price might be too high.

However, there is a multitude of situations in which it would be opportune to consult this market in order to verify the credit availability and its cost.

For exports of machinery or any other equipment with middle term payments, where there is an evidence of the credit with Promissory Notes or any transferable instrument , it is also a good thing to inquire about costs.

The sooner it is known, the better; because it would be easier to include it in discount, either in terms of disponibility or in terms of costs as well. The same is valid for a company that has limited access maket in banks; forfeaiting can be interesting, either in terms of availability as well as in terms of cost.

The forfeiting allows certain flexibility to determine when to get into the market. An exporter, for instante, can decide to maintain the credit in its books for certain time or decide to sell only a part of the credit.

Forfeiting market is good for creating ajusted products. Consecuently, the is not be be afraid of offering to the market a variaty of diferent operations.

The local bank used by the exporter usually has an important role in suggesting or in discouraging the use of such a product. A company that knows well the market can be a great advise on which is the best way of structuring the operation and on advising how to find the best cost.

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