Factoring companies, financing guarantees, financial leasing, etc. are all "quasi-financial" institutions.

China's factoring market is divided into two markets: bank factoring and commercial factoring, which were previously supervised by the China Banking Regulatory Commission and the Ministry of Commerce respectively. The industry generally believes that, in essence, bank factoring is not real factoring, but is equivalent to a pledge of accounts receivable loan. Instead, commercial factoring companies are in line with international rules and mechanisms and engage in the transfer of accounts receivable, which is credit financing.

Extended information

About the supervision of commercial factoring:

After commercial factoring is placed under the unified guidance and supervision of the China Banking Regulatory Commission in the future, the first problem is how to unify supervision standards.

Commercial factoring and bank factoring are essentially different, and the standard language is also different and needs to be unified. In addition, the China Banking Regulatory Commission will have separate requirements for the entity, capital constraints, registered capital, senior management qualifications, etc. of factoring companies.

Factoring, considered a supply chain financial carrier, is a counter-economic cycle industry. Under the new normal of supply-side structural reform, factoring has unique advantages in solving financing difficulties and expensive financing for small, medium and micro enterprises and reducing corporate leverage.

In fact, compliance supervision of factoring companies has already begun. The "factoring P2P online lending" model was once popular, and industry associations in South China have asked factoring companies to stop cooperating with P2P online lending institutions.

The most important thing for supervision when looking at commercial factoring is to look at the risk of the underlying assets and whether the factoring is based on a real trade background. The current approach is to manually review relevant transaction documents and use relevant materials on the transaction background to ensure that the underlying accounts receivable are true and valid.

Reference materials:?Baidu Encyclopedia?Commercial Factoring