Factoring contract is a secured payment agency business.

Guarantee agency business, referred to as factoring, refers to the short-term accounts receivable creditor's rights generated by the bank's purchase of supplier's credit, and the loan is paid by the bank to the seller's enterprise in advance; Then the bank acts as the creditor's right agent of the seller, and then collects it from the buyer's enterprise. Although the loan object of this business is the same as that of the accounts receivable pledge business, there are differences in the handling methods of creditor's rights and debts.

Factoring business is usually divided into three categories:

1. Commercial factory

Refers to the factoring business carried out by non-bank factors.

2. Domestic factoring business.

Refers to the factoring business provided by the factor for buyers and sellers in domestic trade.

3. International factories.

Refers to the factoring business provided by the factor for buyers and sellers in international trade.

Extended data:

Compared with the traditional settlement method, the advantage of factoring mainly lies in the financing function. Factors provide at least the following two services:

1, trade financing

According to the seller's capital demand, the factor can provide financing to the seller immediately after receiving the assigned accounts receivable to help the seller solve the liquidity problem.

2. Sales ledger management

According to the requirements of the seller, the factor can regularly provide the seller with the collection of accounts receivable, overdue accounts, aging analysis, etc. , and send various reports to assist sellers in sales management.

3. Collection of accounts receivable

Factors have professionals engaged in collection work, and they will take reasonable, powerful and economical measures to help sellers collect accounts safely according to the overdue time of accounts receivable.

4. Credit risk control and bad debt guarantee

The factor can verify the credit line for the buyer according to the seller's demand, and provide 100% bad debt guarantee for the accounts receivable generated by the seller's delivery within the credit line.