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INTERNATIONAL FACTORING
Mar 08, 2017

International Factoring uses when we adopt D/A payment, the Export risk thus increases. To reduce the unnecessary risk, sometimes we can choose international factoring.

After delivery, the exporter make over the receivables and shipping documents to factor, then most of the loans can be charged. Once the importer doesn’t pay or delayed payment in the future, can be the factor responsibility for payment. In factoring business, factor undertake the first payment responsibility.

 

It can be divided into “financial factoring” and “maturity factoring”.

(1)Financial Factoring:

When exporters transfer the receivable bills to factor, factor immediately provide in a kind of in advance payment terms to exporter not exceeding 80% receivable financing, the remaining 20% should collect when importers receive full payment, then end up in liquidation.

(2)Maturity Factoring:

on receipt of the documents such as sales invoices which is submitted by the exporters, factor does not need to provide International financing , but in the document expires, paying off the money to exporters.

Step:

exporter find a domestic factor

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Domestic factor find an importer factor

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Import factor invest the importer’s credit standing and respectability, make sure of the preliminary approval of a certain credit limit, notify the export factor

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Importer accept domestic factor’s credit limit, sign ”Export Factoring Service Agreement”, notifying the import factor credit approval, period of validity

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Exporter deliver goods, send original invoice, BL, C/O, quality testing certification,etc, to importer. Copy ones to exporter factor. Supply “The creditor's rights transfer notice” & “Export factoring financing application”, transfer the receivables to domestic factor and apply accommodation of funds. Domestic factor supply 80% invoice funds.

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Exporter factor notify the importer factor, importer factor remind importer factor to collect the money

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Invoice expires, importer pay total money to import factor, import factor pay to domestic factor, after deducting extra fee, domestic factor pay remaining sum to export.


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