EnterprisesDivision
STRATEGY
Our objective is to become the financing partner of choice of SMEs and companies that are under-served by banking institutions. Consequently, our focus and objectives are centered on improving the experience of these customers when they require financing solutions.
We want to be known for the quality of our service and for our ability to meet our customers’ needs, while creating deep and lasting relationships with them. To achieve this, we are constantly innovating to create value–added financing solutions that can become tools for the enhancement our customers’ businesses. We aim to make agility, security and good service the hallmark of our value proposition, since we understand that financing is vital for our customers.
Technology is a fundamental pillar of our strategy, since it is one of the main tools that will enable us to differentiate ourselves in this digital era. We want to succeed in becoming one of the country’s leading fintech companies and to be recognized for the excellence of our customer experience.
PRODUCTS
We think about our customers’ whole business cycle and have three core products that allow us to finance their needs in the distinct phases of their business. Through Factoring, we meet our customers’ need for liquidity to meet their most pressing obligations; through Leasing, we finance their investments in movable property and real estate; and through credit we provide a solution for their working capital requirements.
Our whole offering is designed to provide our customers with agile, efficient, secure, high-quality services. Our areas are constantly innovating, looking for new services to meet the needs of those who are currently working with us and those who may do so in the future.
Factoring is a method of financing where companies (or “customers”) transfer their receivables to a factoring company, which becomes the new creditor of the transferred document. The factoring entity pays the customer a percentage of the invoice value, minus the price difference at the time the receivable is purchased. Upon expiration of the invoice, the factoring entity receives payment from the debtor of the receivable and gives the customer the remaining percentage.
Henceforth, factoring is a financing alternative to traditional bank debt for working capital needs. This product is mainly targeted towards small and medium-sized businesses and it allows them to transform their receivables into immediate cash resources without impacting their leverage ratios.
While the factoring industry is relatively old in developed countries, in Chile this product only dates to the early 1980s. At that time, the first factoring companies in Chile were formed by shareholders of financial institutions. When CMF regulations allowed banks to conduct factoring activities, the majority of these factoring companies became bank subsidiaries.
Once the law No. 19,983 went into effect in April 2005 and tax regulations made it mandatory for companies (around 500,000 taxpayers) to use electronic invoicing starting in 2014, the factoring industry gained momentum in Chile. The law No. 19,983 introduced a regulatory framework for factoring activities and made invoices legally enforceable.
The main benefits of factoring for our customers are:
1. Rapid access to financing, backed by the invoice.
2. Exceptional cashflow.
3. Facilitates and optimizes collection procedures and subsequent payment recovery.
The stock reported by the Asociación Chilena de Factoring (Chilean Factoring Association, “ACHEF”) stood at Ch$ 989,759 million (~US$ 1,610 million) at the end of 2017, an increase of 19.9% on 2016, with large companies being the main segment, at 38.4%, and SMEs being in second place, with 26.3% of the stock. The number of ACHEF customers also rose by 10.8%, reaching 8,290 in December. Tanner is the institution within this association with the most customers (33%).
Our Factoring loans increased by 26.2% during 2017, to Ch$ 291,699 million (~US$ 426 million), an increase on the Ch$ 231,060 million (~US$ 375 million) recorded in 2016, with the quality of the portfolio improving considerably compared to the previous year, as reflected in the decline in the non-performing portfolio, indicators and renegotiated portfolio.
Factoring revenue totaled Ch$ 37,279 million (~US$ 60.7 million), increasing 26.8% or Ch$ 7,877 million relative to 2016. On the other hand, expenses totaled Ch$ 14,367 million (~US$ 23.4 million), up Ch$ 4,685 million (~US$ 7.6 million) or +48.4%, explained by an increase in write-offs and provisions of 168.0%. As a result, the reported gross profit of Ch$ 22,911 million for the year, represented a YoY increase of Ch$ 3,192 million or +16.2%, compared to 2016.
These are operations aimed towards financing the working capital needs of our customers, over and above what we already finance through Factoring, with the benefit of being customized to their needs and financial capabilities, which gives them greater flexibility. Total loans for the Corporate Lending segment, which was formed in 2014, went up Ch$ 11,876 million (~US$ 19.3 million), +6.2% YoY, during 2017 to Ch$ 202,715 million (~US$ 330 million). Non-performing loans were higher than the levels seen in 2016, owing to greater maturity of the portfolio and a decrease in the stock of corporate credit, which has practically no default.
Income from this segment totaled Ch$ 16,833 million (~US$ 27.4 million), dropping 10.2% compared to 2016, mainly due to lower income from interest and commissions. Meanwhile, expenses rose to Ch$ 9,328 million (~US$ 15.2 million), +26.9% YoY, due to an increase in write-offs and provisions. Consequently, gross margin was down 34.1% YoY, totaling Ch$ 7,505 million (~US$ 12.3 million).
Leasing is a financial solution to address the financing needs of companies for the purchase of capital assets. This solution allows Leasing clients to invest, grow, expand and upgrade assets while taking advantage of important financial and tax benefits. It consists of a lease agreement for a predetermined length of time over which the lessee pays monthly rental payments that in aggregate amortize the value of the assets. At the end of the contract, the lessee can purchase the asset by exercising a purchase option.
The main benefits of leasing for our customers are:
1. Provides financing for up to 100% of the transaction.
2. Allows 100% of the fee to be counted as expenditure, which reduces the tax base.
3. Goods are insured throughout the lifetime of the contract, giving access to better premium and cover terms.
4. No interest charged on VAT, which represents financial saving.
5. Payment schedule to meet the customer’s needs, with flexibility of currency and payment period.
Tanner’s Leasing loans totaled Ch$ 100,900 million (~US$ 164 million) in 2017, dropping 10.8% YoY compared to the Ch$ 113,143 million (~US$ 184 million) recorded in the previous year. Despite having fewer loans, the portfolio quality of the portfolio deteriorated, especially in terms of the NPLs >30 and >90 days.
Leasing revenue during 2017 totaled Ch$ 12,157 million (~US$ 19.8 million), reflecting a YoY decrease of 8.0%, Ch$ 1,056 million (~US$ 1.7 million). Costs increased Ch$ 390 million (~US$ 0.6 million), +4.5%, to Ch$ 9,128 million (~US$ 14.84 million) in 2017, as a result of higher write-offs, provisions and interests, which led to a gross profit of Ch$ 3,029 million (~US$ 4.9 million), a 32.3% or Ch$ 1,447 million YoY reduction.
Client Experience
In the Enterprises Division of Tanner, we are convinced that the customer must be at the heart of everything we do, and our purpose is to provide a customer experience that leads to deep and long-lasting relationships. This means working every day to meet the needs of our customers better than our competition. We are aware of our customers’ continued efforts to grow and evolve, and we want to help by making their work simpler.
During 2017, we made major advances in improving the customer experience, including:
PRIVATE FACTORING SITESince we know that an omnichannel approach provides our customers with greater flexibility and that service via a physical branch is not always necessary, in July, we launched a new online portal that allows our clients to save time by conducting their operations online.
Submitting an invoice involves three simple steps: loading the invoice, confirming the results and transferring the documents.
Through this new development, we continue to position Tanner as a valuable business partner able to provide an agile and secure service to our customers.
DIGITAL MARKETING STRATEGYWe implemented a marketing strategy based on digital media, since we are aware of the increasing need in today’s world for immediacy of communication – the main characteristic of the various digital platforms. This strategy has enabled us to be present in every single “moment of truth” in which we interact with our customers and has enabled us to manage these interactions more effectively.
Using digital marketing as a complement to traditional marketing has allowed us to benefit from greater access to real-time data, customized offerings, testing and an overall greater reach
We are also communicating with our community through various platforms so we can disseminate information about our innovations, and communicate useful information and relevant developments. We want to become a pioneer in the development of digital communication channels with our customers and to be recognized and valued by our virtual community. With this new strategy we continue to enhance our brand by increasing its value and recognition, as well as increasing levels of satisfaction and loyalty.
IMPLEMENTATION OF NEW BUSINESS CENTERSDuring 2017, we created new Business Centers aimed at generating synergies within the organization, achieving greater efficiency and enhancing our ability to offer a compelling value proposition to our customers. With these new centers, we want our employees to share their successes and best practices, enabling us to become a recognized and preferred partner. These centers also give us the chance to standardize our levels of service across the Division.