FOCTORING
FOCTORING
FOCTORING
Factoring
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FOCTORING
Definition: Factoring is defined as a continuing legal relationship between a financial institution (the factor) and a business concern (the client), selling goods or providing services to trade customers (the customers) on open account basis whereby the Factor purchases the clients book debts (accounts receivables) either with or without recourse to the client and in relation thereto controls the credit extended to customers and administers the sales ledgers.
It
is the outright purchase of credit approved accounts receivables with the factor assuming bad debt losses. provides sales accounting service, use of finance and protection against bad debts. is a process of invoice discounting by which a capital market agency purchases all trade debts and offers resources against them.
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Factoring
Factoring
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Client
custo mer
collectio n
Buy er
facto r
b in u voi ys ces
Fin an cer
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Financial Other
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Types of Factoring
Full Full
Service Non-recourse Factoring (old-line Factoring) Service Recourse Factoring Factoring and Non-notified Factoring and Maturity Factoring Factoring
Advance Invoice
International
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Costs of Factoring
The
Fee
The
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Benefits of Factoring
The
client will be relieved of the work relating to sales ledger administration and debt collection client can therefore concentrate more on planning production and sales. charges paid to a factor which will be marginally high at 1 to 1.5% than the bank charges will be more than compensated by reductions in administrative expenditure. will also improve the current ratio of the client and consequently his
The
The
This
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Kalyana Sundaram Committee recommended introduction of factoring in 1989. Banking Regulation Act, 1949, was amended in 1991 for Banks setting up factoring services. SBI/ Canara Bank have set up their Factoring Subsidiaries:SBI Factors Ltd., (April, 1991) ( an asset base of Rs 1908.00 corers as on March 31, 2008, highest in India) Canara Bank Factors Ltd., (August, 1991). RBI has permitted Banks to undertake factoring services through subsidiaries.
b)
c)
d)
e) f)
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Whom To Be Offered
Pricing Promotion
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The concept of factoring in India is quite new. traders and manufacturers, particularly belonging to small scale and medium sectors are not fully aware of the concept of factoring. is important to educate them about the types of services provided by these factoring agencies. marketing efforts are necessary to make the clients aware of the factoring services offered in India by institutions such as ECGC.
Many
It
More
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Thank you