The quarantine parate has put companies in trouble, who went out to look for sources of financing to cope with this unusual scenario.
It is common for SMEs to go to the capital market to discount securities (selling them to advance their collection) and that another entity is willing to buy them obtaining an interest rate as a "prize".
In this framework, electronic checks or echeqs burst in with more force than ever. Furthermore, in the current scenario, with the inability to move and the banks closed, operations and inquiries about how to operate have exploded.
Easy, safe and with a better rate
On April 1, Garantizar SGR, one of the companies that guarantees echeqs transactions, announced that the companies were managing to finance themselves at an attractive rate of 17.5% per year through deferred checks. Although not all banks are required to issue this digital version, they must receive them by regulation of the Central Bank.
"They do not need to register any agreement, or go to the branch, or contact their officer. They simply need to enter Office Banking, assign permissions to each user and enter Accounts by Electronic Check. That way, they can now issue and receive without any additional steps, "Roberto Lopresti, Product Owner of Checks at Banco Galicia, details one of the first entities that joined this proposal, launched in July.
The steps to use them are as follows:
1.- When the echeq has already been deposited in the bank account, you must register on the EPYME platform of the Caja de Valores, a very simple procedure that has no cost
2.- There you have to enter the number of each check you want to "sell" for subsequent negotiation
3.- A reciprocal guarantee company (SGR) will give the guarantee (these are companies authorized by the Stock Market that act as guarantor. There are more than 40 operating in the country)
4.- With the "OK" of the SGR, a settlement agent and accounts will negotiate the instrument in the Argentine Stock Market
5.- The check will be sold to the highest bidder in a rate auction that takes place within the market. The amount of the transaction will be transferred to the account of the SME
However, companies that want to sell their echeq incur three types of costs:
- Discount rate: for example, if the check is for 120 days and for $ 100,000, and the SME wants to sell it today because it requires financing, someone can buy it for $ 95,000
- SGR Commission: the SGR gives the guarantee to guarantee the investor that, yes or yes, he will be paid on the established date, for which he charges a fee of around 3% per year
- Commission of the settlement agent and accounts: is the person who is in charge of negotiating the echeq, receiving 1% per year
As in any market, the discount rate varies from day to day, according to the supply and demand of this instrument: the more investors want to buy it, the lower it will be. Currently, financing can be found between 15% or 20% per year. However, on April 3, Garantizar obtained 5%.
In addition, all checks can be operated, whether their own or from third parties. In general, the ones that historically have been traded by SMEs in the stock market are the 90 and 120 days. "The shorts are kept by customers and the long ones are kept in banks," Simón Carman, commercial manager of Garantizar SGR, the country's largest reciprocal guarantee company with 30 branches and 70% of guarantees, tells iProUP. . The rates are usually much more attractive than other forms of financing for SMEs, such as bank loans.
This is, in part, because while buyers may be private (an investor, for example), the main purchasers of checks are mutual funds (FCIs).
This is because the Government requires, by law, to have a percentage of its portfolio in 'SME products'. Therefore, generally, there is more demand than supply of negotiated checks, and hence the best rate.
Sustained growth
Since the Caja de Valores negotiated the first echeq, operations have not stopped growing. Thus, SMEs access a better rate even than that offered by banks, beyond the quarantine closure.
In addition, companies can issue their own electronic securities through Home Banking, an option enabled in most of the most recognized entities in the country. "Today, Home Banking is what the checkbook was before," says Carman, encouraging owners or managers of "old school" companies not to fall behind and take advantage of the electronic check. In addition, it details that it is much safer, since being digital it is not necessary to transport it personally.
From the Supervielle explain that companies that wish to issue an electronic check must enter Online Banking and from the Accounts item press Echeq / Manual Issue.
Similarly, Lopresti, from Galicia, stresses that to issue them you only need to have the CUIT of the beneficiary and enter the check data: amount and date of payment (up to date or deferred). Then, you must choose a concept or reference for the transaction.
In March, Garantizar operated securities at an annual average of 25% to 27%. However, in early April, financing was offered at 17.5% per annum. On the other hand, there is no minimum to operate. "A company can bring a large amount from a supermarket chain, but there are also smaller amounts from small companies," says Carman.
Beyond the sums, the total volume of financing is by no means negligible: only Garantizar negotiates around 700 checks for a total value of $ 100 or $ 120 million per day.
In the case of Supervielle, it issued 60% more echeqs and almost 300% more in amounts in March compared to last month. And only in the first three business days of April doubled the amount issued throughout February. In this framework, with the "most resentful" payment chain, Carman explains, small and medium-sized companies are increasingly turning to this new tool.
Quarantined keys
The management of electronic checks is 100% digital, so the closure of quarantined branches has not been an impediment to their use. According to Lopresti, they bring "a solution that avoids any type of physical contact by the issuer with both the bank and the beneficiary."
In effect, echeq "had a strong boost in quarantine as it was the cheapest way to finance yourself without leaving your home," says Carman de Garantizar. In fact, growth has been constant: Garantizar operated $ 7 million on March 30, $ 15 million on March 31; $ 20 million on April 1 and a record $ 35 million the next day.
Going forward, Carman believes that the rate will stabilize at around 20% per year, while the volume of transactions will continue to rise.
Galicia's numbers also reflect the trend: in the last 15 days of quarantine, 1,500 clients began using electronic checks, which translates into a 25% increase in the number of clients.
"Definitively, the electronic check is the new thing for the companies. Many clients are contacted these days asking for them," says Roberti. "At the beginning, SMEs showed us that the current situation worried them a lot, mainly the difficulty that the context poses for them to continue with their collection and payment chain," says Lopresti, from Galicia.
And he adds: "The great challenge is to overcome some kind of prejudice that still exists, but the reality is that all clients who are encouraged, afterwards do not want to use physical papers again."
Banco Galicia is currently the only entity that offers clients to send their echeqs to custody. In other words, they are "bought" directly from SMEs by immediately transferring the amount of the operations.
Other entities are working against the clock to offer the same service. One of them is the Supervielle which, according to Gabriel Grasso, Cash Management Manager, has "had a substantial growth in inquiries" in recent days.
"We are putting all our efforts to respond to each need, taking into account the positive feedback and understanding the current urgency in the face of the situation," he told iProUP.
In this context, Carman, from Garantizar, assures that "there is still a lot of room for growth." And he concludes: "In two years, the physical check will disappear."
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