factoring ppt

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Presented By: Mehak Nanda (14) Pahul Walia (18) Sultan Mohammad (24) Tanu Aggarwal (25) FACTORING


Meaning The word “ Factor ” has been derived from the Latin word “ Facere ” which means “ to make or to do or to get things done ” Factoring may broadly be defined as the relationship, created by an agreement, between the seller of goods/services and a financial institution called the factor, whereby the latter purchases the receivables of the former and also controls and administers the receivables of the former.

Who is factor?:

Who is factor? Factor is a financial institution that specializes in purchasing receivables from business firms. Factor assumes the risk of collection of receivables and on the event of non payment by debtors/customers bears the risk of bad debt and losses


Definition According to Peter M Biscose:- Factoring may also be defined as a continuous relationship between financial institution (the factor) and a business concern selling goods and/or providing service (the client) to a trade customer on an open account basis, whereby the factor purchases the client’s book debts (account receivables) with or without recourse to the client - thereby controlling the credit extended to the customer and also undertaking to administer the sales ledgers relevant to the transaction.

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The study group appointed by International Institute for the Unification of Private Law (UNIDROIT), Rome during 1988 recommended, in simple words, the definition of factoring as under: “Factoring means an arrangement between a factor and his client which includes at least two of the following services to be provided by the factor: Finance Maintenance of accounts Collection of debts Protection against credit risks”.


Concept Factoring is a specialized activity whereby a firm converts its receivable into cash by selling them to a factoring organization.

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Client :- Client is the person who wants to sell the commodity to the customer. Customer :- Customer is the person who wants that commodity but he do not have sufficient money. Factor :- Factor enters into agreement with the client for rendering factor services to it. The factor receives payment from the buyer on due dates and remits the money to seller after usual deductions.



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The mechanism of factoring is summed up as below: i . An agreement is entered into between the selling firm and the firm. The agreement provides the basis and the scope understanding reached between the two for rendering factor service. ii. The sales documents should contain the instructions to make payment directly to the factor who is assigned the job of collection of receivables. iii. When the payment is received by the factor, the account of the firm is credited by the factor after deducting its fees, charges, interest etc. as agreed. iv. The factor may provide advance finance to the selling firm conditions of the agreement so require.


TYPES OF FACTORING Recourse and Non-recourse Factoring Advance and Maturity Factoring Conventional or Full Factoring Domestic and Export Factoring Limited Factoring Selected Seller Based Factoring Selected Buyer Based Factoring Disclosed and Undisclosed Factoring

Recourse and Non-recourse Factoring :

Recourse and Non-recourse Factoring In a recourse factoring arrangement , the factor has recourse to the client (selling firm) if the receivables purchased turn out to be bad, then the risk of bad debts is to be borne by the client and the factor does not assume credit risks associated with the receivables. Thus the factor acts as an agent for collection of bills and does not cover the risk of customer’s failure to pay debt or interest on it.

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Whereas, in case of non-recourse factoring , the risk or loss on account of non-payment by the customers of the client is to be borne by the factor and he cannot claim this amount from the selling firm. Since the factor bears the risk of non-payment, commission or fees charged for the services in case of nonrecourse factoring is higher than under the recourse factoring. The additional fee charged by the factor for bearing the risk of bad debts/non-payment on maturity is called del credere commission.

Advance and Maturity Factoring:

Advance and Maturity Factoring Under advance factoring arrangement , the factor pays only a certain percentage (between 75 % to 90 %) of the receivables in advance to the client, the balance being paid on the guaranteed payment date. As soon as factored receivables are approved, the advance amount is made available to the client by the factor. The Factor charges discount/interest on the advance payment from the date of such payment to the date of actual collection of receivables by the factor.

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In case of maturity factoring , no advance is paid to client and the payment is made to the client only on collection of receivables or the guaranteed payment data as the case may be agreed between the parties. Thus, maturity factoring consists of the sale of accounts receivables to a factor with no payment of advance funds at the time of sale.

Conventional or Full Factoring:

Conventional or Full Factoring Under this system the factor performs almost all services of collection of receivables, maintenance of sales ledger, credit collection, credit control and credit insurance. The factor also fixes up a draw limit based on the bills outstanding maturity wise and takes the corresponding risk of default or credit risk and the factor will have claims on the debtor as also the client creditor. It is also known as Old Line Factoring. Factoring agencies like SBI Factors are doing full factoring for good companies with recourse.

Domestic and Export Factoring:

Domestic and Export Factoring The basic difference between the domestic and export factoring is on account of the number of parties involved. In the domestic factoring three parties are involved, namely: Customer (buyer) Client (seller) Factor (financial intermediary) All the three parties reside in the same country .

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Export factoring is also termed as cross-border/international factoring and is almost similar to domestic factoring except that there are four parties to the factoring transaction. Namely, the exporter (selling firm or client), the importer or the customer, the export factor and the import factor . Since, two factors are involved in the export Factoring, it is also called two-factor system of factoring. Two factor system results in two separate but inter-related contracts: 1. between the exporter (client) and the export factor. 2. Export factor and import factor.

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The import factor acts as a link between export factor and the importer, helps in solving the problem of legal formalities and of language. He also assumes customer trade credit risk, and agrees to collect receivables and transfer funds to the export factor in the currency of the invoice. Export/International factoring provides a non-recourse factoring deal. The exporter has 100 % protection against bad debts loss arising on account of credit sales.

Limited Factoring:

Limited Factoring Under limited factoring, the factor discounts only certain invoices on selective basis and converts credit bills into cash in respect of those bills only.

Selected Seller Based Factoring :

Selected Seller Based Factoring The seller sells all his accounts receivables to the factor along with invoice delivery challans, contracts etc. after invoicing the customers. The factor performs all functions of maintaining the accounts, collecting the debts, sending reminders to the buyers and does all consequential and incidental functions for the seller. The sellers are normally approved by the factor before entering into factoring agreement

Selected Buyer Based Factoring:

Selected Buyer Based Factoring The factor first of all selects the buyers on the basis of their goodwill and creditworthiness and prepares an approved list of them. The approved buyers of a company approach the factor for discounting their purchases of bills receivables drawn in the favor of the company in question (i.e. seller). The factor discounts the bills without recourse to seller and makes the payment to the seller.

Disclosed and Undisclosed Factoring:

Disclosed and Undisclosed Factoring In disclosed factoring , the name of the factor is mentioned in the invoice by the supplier telling the buyer to make payment to the factor on due date. However, the supplier may continue to bear the risk of bad debts (i.e. non-payments) without passing to the factor. The factor assumes the risk only under nonrecourse Factoring agreements. Generally, the factor lays down a limit within which it will work as non-recourse. Beyond this limit the dealings are done on recourse basis i.e. the seller bears the risk.

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Under undisclosed factoring , the name of the factor is not disclosed in the invoice. But still the control lies with the factor. The factor maintain sales ledger of the seller of goods, provides short-term finance against the sales invoices but the entire transactions take place in the name of the supplier company (seller).


FUNCTIONS OF FACTORING The purchase of book debts or receivables is central to the function of factoring permitting the factor to provide basic services such as: Administration of sellers’ sales ledger. Collection of receivables purchased. Provision of finance. Protection against risk of bad debts/credit control and credit protection. Rendering advisory services by virtue of their experience in financial dealings with customers.

1. Administration of Sales Ledger :

1. Administration of Sales Ledger The factor assumes the entire responsibility of administering sales ledger. The factor maintains sales ledger in respect of each client. When the sales transaction takes place, an invoice is prepared in duplicate by the client, one copy is given to customer and second copy is sent to the factor.

2. Collection of Receivables :

2. Collection of Receivables The factor helps the client in adopting better credit control policy. The main function of a factor is to collect the receivables on behalf of the client and to relieve him from all the botherations/ problems associated with the collection. This way the client can concentrate on other major areas of his business on one hand and reduce the cost of collection by way of savings in labor, time and efforts on the other hand. The factor possesses trained and experienced personnel, sophisticated infrastructure and improved technology which help him to make timely demands on the debtors to make payments.

3. Provision of Finance :

3. Provision of Finance Finance, which is the lifeblood of a business, is made available easily by the factor to the client. A factor purchases the book debts of his client and debts are assigned in favor of the factor. 75% to 80 % of the assigned debts is given as an advance to the client by the factor. a. Where an agreement is entered into between the client (seller) and the factor for the purchase of receivables without recourse, the factor becomes responsible to the seller on the due date of the invoice whether or not the buyer makes the payment to the factor. b. Where the debts are factored with recourse- the client has to refund the full finance amount provided by the factor in case the buyer fails to make the payment on due date.

4. Protection Against Risk :

4. Protection Against Risk This service is provided where the debts are factored without recourse. The factor fixes the credit limits (i.e. the limit up to which the client can sell goods to customers) in respect of approved customers. Within these limits the factor undertakes to purchase all trade debts and assumes risk of default in payment by the customers.

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The factor not only relieves the client from the collection work but also advises the client on the creditworthiness of potential customers. Thus the factor helps the client in adopting better credit control policy. The credit standing of the customer is assessed by the factors on the basis of information collected from credit rating reports, bank reports, trade reference, and financial statement analysis and by calculating the important ratios in respect of liquidity and profitability position.

5. Advisory Services :

5. Advisory Services These services arise out of the close relationship between a factor and a client. Since the factors have better knowledge and wide experience in field of finance, and possess extensive credit information about customer’s standing, they provide various advisory services on the matters relating to: Customer’s preferences regarding the client’s products. Changes in marketing policies/strategies of the competitors. Suggest improvements in the procedures adopted for invoicing, delivery and sales return. Helping the client for raising finance from banks/financial institutions, etc.

Legal aspects of factoring:

Legal aspects of factoring Factoring contract is like any other sale- purchase agreement regulated under the law of contract. There is no codified legal framework / code to regulate factoring services in India. Some of the contents of a factoring agreement and legal obligations of the parties are listed as follows: The client gives an undertaking to sell and the factor agrees to purchase receivables subject to terms and conditions mentioned in the agreement. The client warrants that the receivables are valid enforceable, undisputed and recoverable. He also undertakes to settle disputes, damages and deduction relating to the bills assigned to the factor.

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The client agrees that the bills purchased by the factor on a non-recourse basis (i.e. approved bills) will arise only from transactions specifically approved by the factor or those falling within the credit limits authorized by the factor. The client agrees to serve notices of assignments in the prescribed form to all those customers whose receivables have been factored. The client agrees to provide copies of all invoices, credit notes, etc., relating to the factored accounts, to the factor and the factor in turn would remit the amount received against the factored invoices to the client. The factor acquires the power of attorney to assign the debts further and to draw negotiable instruments in respect of such debts.

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The time frame for the agreement and the mode of termination are specified in the agreement. The legal status of a factor is that of an assignee. The customer has the same defense against the factor as he would have against the factor as he would have against the client. The customer whose account has been factored and has been notified of the assignment is under legal obligation to remit the amount directly to the factor failing which he will not be discharged from his obligation to pay the factor even if he pays directly to the client remits the amount to the factor. Before factoring a receivable, the factor requires a letter of disclaimer from the bank which has been financing the book debts so that the bank will not provide post-sales finance as the factor provides the same.

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The firm has to guarantee that the book debts are free from any rights of a third party in the factoring agreement. The factor has sometimes to act quickly to recover money due on an invoice. The agreement must provide for the factor to act swiftly in his name, whenever necessary. The factoring agreement sets out in detail how the firm s to be paid. The attraction of factoring for many companies is the non-recourse factoring which depends on whether the debt is approved or not, which is decided before the factoring process starts. If any of the customers pay it to the client by mistake, the agreement provides that the firm must hold the money for the factor. If he does not do so, this is effectively a breach of trust and the firm may be held responsible for any losses incurred by the factor.

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Some warrants that are required are: (a) The firm should disclose any materials facts that it knows might affect the factor’s decision to approve a debt. (b) It has to warrant that the invoices sent for factoring represents a proper debt for goods supplied. The factor may require the customer to notify it immediately in case of disputed debts. The firm may be expected to return any advances made to it in respect of the disputed debt. The factor’s power to inspect the firm’s books and accounts and the period of the factoring arrangements is usually laid down in the agreement.

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The client undertakes: To have the factor serve as the sole factor (clients occasionally may have more than one factor but that is more exception than the rule); To provide a satisfactory assignment together with actual invoices and evidence on delivery: To submit all the sales to the factor prior to shipping for credit approval. To grant the factor the right to hold any balances standing to its credit as security for any debts owed by the client to the factor, no matter how arising.

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The factor on the other hand undertakes: To purchase bonafide accounts receivables that it has previously approved; To charge interest on sum advanced at a certain defined interest rate; To advance against the purchase price, at its discretion, a percentage thereof and to remit the balance on the monthly average due date of receivables assigned plus 5 to 10 days for collection; To render a statement of account monthly.

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Evaluation Framework The evaluation framework should be on a consideration of the relative costs and benefits associated with the two alternatives to receivables management. They are:

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Factoring And Balance Sheet The impact of factoring on Balance Sheet is exhibited below: Balance Sheet of ABC Co. Ltd. (Before Factoring) Liabilities Amount(Rs) Assets Amount(Rs) Bank Borrowings Against Inventory Against Receivables Other Current Liabilities Net Working Capital 7,00,000 4,00,000 4,00,000 5,00,000 Inventory Receivables Other Current Assets 10,00,000 8,00,000 2,00,000 Total 20,00,000 Total 20,00,000 Current Ratio = Current Assets / Current Liabilities = Rs. 20,00,000 / Rs. 15,00,000 = 1.33 : 1

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Balance Sheet of ABC Co. Ltd. (After Factoring 80% of receivables) Liabilities Amount(Rs) Assets Amount(Rs) Bank Borrowings Against Inventory Against Receivables Other Current Liabilities Net Working Capital 7,00,000 - 1,60,000 5,00,000 Inventory Due from factor Other Current Assets 10,00,000 1,60,000 2,00,000 Total 13,60,000 Total 13,60,000 Current Ratio = Current Assets / Current Liabilities = Rs. 13,60,000 / Rs. 8,60,000 Reduction of Current Liabilities. Improvement in Current Ratio and Efficiency. Higher credit standing. Reduction of cost and expenses.

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Factoring And Profit And Loss Account The Benefits of factoring in terms of the profit and loss account are analyzed as under: The factor performs basis functions like administration of seller’s sales ledger, credit control, collection of dues, etc. This saves the administration costs. The improved liquidity position enables the firm to honor its obligations without any delay. The improved credit standing helps the firm to get the benefits of lower purchase price, longer credit period from suppliers, trade discount on bulk purchases, cash discount on early payment, better market standing, quicker sanction of loans and advances, and better terms and conditions while borrowing etc.

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Illustration: The following are the important assumptions made in constructing the statement: The average receivables of the firms are equal to two months’ sales. All sales are on credit basis. Cost of goods sold is equal to 60% of the sales. Administration costs (which includes credit department expenses of Rs. 2,00,000) and selling costs are assumed to be Rs. 8,00,000 and Rs. 16,00,000 respectively. The bad debts loss percentage is 5% of gross value of sales. The factor charges 2% commission on gross value of sales. The interest charged by the factor as well as by other financial institutions on advance is assumed to be 18% per annum. The margin money is 10%.Material cost is saved by 2.5% on account of lower prices, trade discount, cash discount, etc.

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Profit and Loss Account of ABC Co. Ltd (Before Factoring) Particulars Amount (in Rs.) Particulars Amount (in Rs.) To Material cost To Labour cost To Factory Expenses To Gross Profit 36,00,000 20,00,000 16,00,000 48,00,000 By Sales 120,00,000 120,00,000 120,00,000 To Administrative expenses To Credit Dept. Expense To Selling Expenses To Bad debts To Interest on loan To Net Profit 6,00,000 2,00,000 16,00,000 6,00,000 3,60,000 14,40,000 By Gross Profit 48,00,000 48,00,000 48,00,000 Interest on loan = Rs. 1,20,00,000 x 2/12 x 18/100 = Rs. 3,60,000

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Particulars Amount (in Rs.) Particulars Amount (in Rs.) To Material cost To Labour cost To Factory Expenses To Gross Profit 35,10,000 20,00,000 16,00,000 48,90,000 By Sales 120,00,000 120,00,000 120,00,000 To Administrative expenses To Selling Expenses To Factoring Commission @ 2% To Interest on advance To Net Profit 6,00,000 16,00,000 2,40,000 2,80,800 21,70,200 By Gross Profit 48,90,000 48,90,000 48,90,000 Where, Material cost = Rs. 36,00,000 – 2.5% of Rs. 36,00,000 = Rs. 35,10,000 Amount of advance = Average receivables – Commission @ 2% on sales – 10% reserve. = Rs. 1,20,00,000 x 2/12 – Rs. 2,40,000 – 10% x Rs. 1,20,00,000 x 2/12 = Rs. 20,00,000 – Rs. 2,40,000 – Rs. 2,00,000 = Rs. 15,60,000. Interest on Advance = 18% of Rs. 15,60,000 = Rs. 2,80,800.

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Particulars Amount (in Rs.) Amount (in Rs.) Benefits of Factoring: Savings in Material costs Credit Dept. Expenses Bad Debts losses avoided Interest on loan Less: Costs of factoring: Factoring Commission Interest on Advance 90,000 2,00,000 6,00,000 3,60,000 2,40,000 2,80,800 12,50,000 5,20,800 Net Benefits of Factoring 7,29,200 7,29,200 The Profit and Loss Account and its summary clearly indicate that the overall profitability of ABC Co. Ltd. is increased by Rs. 7,29,200. This increase the ROI and dividend rate, if the management so desires.

Background and Terms of Reference – Kalyanasundaram Report:

Background and Terms of Reference – Kalyanasundaram Report Purchaser of goods and services often delay payments, resulting in working capital problems for the suppliers, particularly the SSI units. The RBI had initiated a series of measures to alleviate the difficulties of the suppliers. However, banks have not been effective in implementing these measures due to operational constraints. The RBI perceived the extension of factoring service as one of the measures to assist in the expeditious collection of receivables.

Kalyanasundaram Report:

Kalyanasundaram Report The Kalyanasundaram Group was constituted to examine the feasibility and mechanics of starting factoring services/ organizations. Its terms of reference included: 1) Consideration of need and scope for one / more factoring organization; 2) Nature of their constitution; in public, private or joint sector; 3) Changes in legal framework for promoting factoring 4) Feasibility of extension of factoring service to exporters; and 5) Other matters relating to factoring.

Need for Factoring Services in India and Assessment of Demand: :

Need for Factoring Services in India and Assessment of Demand: There is sufficient scope for the introduction of factoring services in India, which would be complementary to the services provided by banks. The introduction of export factoring services in India would provide an additional facility to exporters. With a view to attaining a balanced dispersal of risks, factors should offer their services to all industries and all sectors of the economy.

Recommendations of the Kalyanasundram Committee:-:

Recommendations of the Kalyanasundram Committee:- Factoring service in India is of recent origin. It owes its genesis to the recommendations of the Kalyanasundaram Study Group appointed by the RBI in 1989. Pursuant to the acceptance of these recommendations, the RBI issued guidelines for factoring services in 1990. The first factoring company – SBI Factors and Commercial Ltd (SBI FACS) started operation in April 1991.

The main recommendations of the Committee/Group are listed as follows: -:

The main recommendations of the Committee/Group are listed as follows: - sufficient scope for introduction factoring services in India. export factoring services would provide additional facility to exporters. demand for factoring services would grow within a period of two/three years. On the export front, there would be a fairly good availment of various services offered by export factors. for attaining a balanced dispersal of risks, factors should offer their services to all industries and all sectors in the economy.


Cont…… The pricing of various services depend upon the cost of funds. Factors should attempt to keep the cost of funds as low as possible, not exceeding 13.5 percent per annum, so that a reasonable spread is available. The RBI could consider allowing factoring organizations to raise funds from the Discount and Finance House of India Ltd. The price for financing services would be around 16 per cent per annum and the aggregate price for all other services may not exceed 2.5 percent to 3 percent of the debts services. In the beginning only select promoter institutions/groups of individuals with good track record in financial services and competent management should be permitted to meter into this new field. Initially the organizations may be promoted on a zonal basis.


Cont…… There are distinct advantages in the banks being associated with handling of factoring business. it would be desirable to have only four or five organizations which could be promoted by banks. Factoring activities could perhaps be taken up by the SIDBI, preferably in association with one or more commercial banks. The business community should first be educated. support of computers, as quick and dependable means of communication. setting up specialized agencies for credit investigations. proper linkage between banks and factoring organizations.


Cont…... The factoring of SSI units could to be mutually beneficial to both factors and SSI units. To operate in the international market, India may ratify and accept the Unidroit convention on international factoring. An element of competition is absolutely necessary for ensuring satisfactory service to the exporters. Expeditious steps may be taken by government to promote legislation.

RBI Guidelines::

RBI Guidelines: Banks are permitted to set up separate subsidiaries/invest in factoring companies. should not engage in financing of other companies or other factoring companies. Investment of a bank cannot exceed in the aggregate 10% of paid-up capital and reserves of the bank. According to the RBI guidelines (2010), banks now with the prior approval of RBI can form subsidiary companies for undertaking the factoring services and other incidental activities.

Review of existing guidelines::

Review of existing guidelines: The companies carry out all the components of a standard factoring activity, viz., financing of receivables, sale-ledger management and collection of receivables. They derive at least 80 per cent of their income from factoring activity. The receivables purchased/financed, irrespective of whether on 'with recourse' or 'without recourse' basis, form at least 80 per cent of the assets of the Factoring Company. The assets/income referred to above would not include the assets/income relating to any bill discounting facility extended by the Factoring Company.

Advantages of Factoring::

Advantages of Factoring:

Disadvantages of Factoring::

Disadvantages of Factoring:

Bill Discounting:

Bill Discounting Trading or selling a bill of exchange prior to the maturity date at a value less than the par value of the bill. The amount of the discount will depend on the amount of time left before the bill matures, and on the perceived risk attached to the bill.

Difference b/w Factoring & Bill Discounting:

Difference b/w Factoring & Bill Discounting CHARACTERSTICS FACTORING BILLS DISCOUNTING 1. Recourse with or without recourse. Always with recourse. 2. Collector Factor is the collector of receivables. Drawer is the collector of the receivables. 3. Ownership Factor purchases the trade debt and thus becomes a holder for value. Financier acts simply as an agent of his customer and he does not become the owner. 4. Services Also provides other services like sales ledger maintenance and advisory services. Only financing facility is available. 5. Rediscounting Debts purchased for factoring cannot be rediscounted. Discounted bills may be rediscounted several times before they mature for payment. 6. Mode of accounting It is an off-balance sheet financing. No such possibility.


Forfaiting is a form of financing of receivables pertaining to international trade. Forfaiting is the purchase of a series of credit instruments such as drafts, bills of exchange, other freely negotiable instruments on a nonrecourse basis. Forfaiting

Difference b/w Factoring & Bill Discounting:

Difference b/w Factoring & Bill Discounting BASIS OF DIFFERENCE FACTORING FORFAITING 1. Extent of Finance Usually 75-85% of the value of the invoice is considered for advance. 100% Financing. 2. Recourse May be with or without recourse. Always without recourse. 3. Type of transaction Either domestic transaction or export transaction. Always export transaction. 4. Services Provided other allied services are provided. It is a pure financing arrangement. 5. Maturity Advances are short-term in nature. Advances are generally medium term spread over 3-5 years. 6.Exchange rate fluctuations It does not guard against exchange rate fluctuations. Forfaiter charges a premium for such risk.

Factoring in India:

Factoring in India SBI Factors and Commercial Services (SBI FACS) Ltd Canbank Factors Ltd Foremost Factors Ltd (FFL) Global Trade Finance Ltd (GTF) The Hongkong and Shanghai Bank Corporation Limited (HSBC) Export Credit Guarantee Corporation of India Ltd. (ECGC) India Factoring and Finance Solutions Pvt Ltd (India Factoring)


SBI FACS Ltd Subsidiary of State Bank of India. 1st factoring company to be set up in India. incorporated in February 1991 & commenced business operations from April 1991. SBI and its 2 associate banks have a 70% stake in SBI Factors while 20% is held by SIDBI and 10% by Union bank of India. offers Domestic Factoring with recourse and without recourse, purchase bill factoring, factoring of Usance Bills etc.

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jointly promoted by the Canara Bank, Andhra Bank and SIDBI in August,1992. its Rs. 10 crore paid-up capital was contributed in the proportion of 60:20:20 by three promoters respectively. Initially operated in the south zone but regional restrictions on their operations were subsequently removed by the RBI. main services provided by the Canbank Factors Ltd are domestic factoring and invoice discounting.

Foremost Factors Ltd :

Foremost Factors Ltd incorporated in February 1996. promoted by Mohan Group and Nations Bank Overseas Corporation of U.S.A. along with 20th Century Finance Corporation Limited (TCFC Limited) and ICDS Group as institutional investors. Changed its name to IFCI Factors Limited as when IFCI acquire the share capital of the company in 2008-09. major services are domestic sales bill factoring, purchase bill factoring, export sales bill factoring and corporate loan.

Global Trade Finance Ltd :

Global Trade Finance Ltd joint venture between EXIM Bank, India’s premier export finance institution, International Factoring Corporation(IFC) Washington, FIN Bank, Malta and Bank of Maharashtra. incorporated on March 13, 2001 with a paid-up capital of Rs. 45 crore . Offers export-financing solutions such as Forfaiting and Factoring for small and medium sized Indian exporters (SMEs) only factoring company in India to offer online web access to its clients for accessing their accounts.

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it introduces its own direct factoring services in 1997-98 to help small scale sector in timely recovery of their sale proceeds. Factoring scheme of SIDBI is a comprehensive package of receivables management service including advance against invoices and other allied services such as collection of proceeds from the purchaser, administration of sales ledger etc. aims to ensure adequate liquidity at all times.

The Hongkong and Shanghai Bank Corporation Limited:

The Hongkong and Shanghai Bank Corporation Limited discontinued providing factoring services in the year 2008 after providing this service for a period of 5 years. It has now re-launched the product with a few changes concentrating majorly on MSMEs. Services provided by HSBC are: Domestic Factoring, Invoice Factoring and Export Factoring.

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The Export Credit Guarantee Corporation of India Limited is a company wholly owned by the Government of India. initially set up Export Risks Insurance Corporation (ERIC) in July 1957. transformed into Export Credit and Guarantee Corporation Limited (ECGC) in 1964 and to Export Credit Guarantee of India in 1983. introduced non-recourse maturity export factoring. But later ECGC restructured its ‘maturity factoring’ scheme and finally launched full fledged factoring scheme.

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established in December 2009. providing trade finance services for small and medium enterprises (SMEs) and small-scale industries with a special focus on the ever-increasing international (export and import) and domestic factoring. The objective of the Company is to provide factoring and forfaiting services, encompassing finance and value added services, efficiently and competently.

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