Import and Export Factoring in Trade Finance

Export Factoring
Export factoring is a comprehensive accounts receivable management service encompassing finance, credit protection, collection and sales ledger management for exports on open account terms. Under factoring, the supplier and the factor enter into an agreement wherein the factor purchases the receivables of the supplier and may provide at least two of the above mentioned services. The credit provided by the factor to the seller is linked to the value of the supplier’s accounts receivable and not the supplier’s credit-worthiness. The supplier and the buyer are located in different countries. The factor avails the services of the correspondent factor in the buyer’s country to provide credit protection and collection. Factoring is a growing source of external financing for large corporations and SMEs.

Import Factoring
Import factoring is a financial service that enables you to purchase goods from your overseas supplier on short term credit of up to 120 days on open account terms without the need for opening a letter of credit (LC). As an importer, you will receive credit from your overseas suppliers without incurring any additional cost. Your primary obligation would be to make payment to the Factor on the due date.

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