Factoring business is an emerging comprehensive financial service that integrates trade financing, business credit investigation, accounts receivable management and credit risk guarantee. The bank's factoring business can be divided into two categories: domestic factoring business and foreign factoring business.

Domestic factoring business, also commonly known as accounts receivable financing, refers to a business in which the company transfers your accounts receivable to the bank to obtain funds in advance after passing the bank's review. ?

According to different types, it can be divided into buyout factoring and repurchase factoring. ? The audit focus of factoring banks is mainly to check the repayment ability of the debtor (that is, the company that owes the company money)?

Foreign factoring is mainly a financial product designed based on the import and export business of import and export enterprises. Its main function is also to enable import and export companies to obtain funds in advance. ? Specific products include packaged loans, invoice discounting, etc. ? This leads to the denial of the validity of the retention contract itself. "

Extended information:

The definition of factoring in the "International Factoring Convention" of the International Institute for the Unification of Private Law

Factoring refers to the seller/supplier/exporter There is a contractual relationship between the seller and the factor. According to this contract, the seller/supplier/exporter transfers its current or future accounts receivable based on the goods sales/services contract entered into with the buyer (debtor). Transfer to a factor, which will provide it with at least two of the following services:

Trade financing

Sales sub-account management

In After the seller enters into the factoring business, the factoring company will regularly or irregularly provide the seller with information on the recovery of accounts receivable, overdue accounts, changes in credit limits, statements and other financial information based on the seller's requirements. Statistical reports to assist the seller in sales management.

Collection of accounts receivable

Factors generally have professionals and full-time lawyers to collect accounts according to the requirements. When the payment is overdue, notifications by letter, phone calls, door-to-door reminders, and legal measures will be taken.

Credit risk control and bad debt guarantee

The seller signs a factoring agreement with the factor. Afterwards, the factoring company will approve a credit limit for the debtor, and during the execution of the agreement, the credit limit will be adjusted based on changes in the debtor's credit status. For the accounts receivable generated by the seller's shipments within the approved credit limit, the factor will guarantee the credit limit. The broker provides 100% bad debt guarantee

Baidu Encyclopedia-Bank Factoring