International Factoring 48 Factoring Inc.
Contents • What is factoring 2.0 • What is international factoring transaction • Steps to International Factoring • Conclusion
What is Factoring 2.0 • Factoring 2.0 is one of the best financial alternative for small business. • This mainly depend on customer invoice. For this process, your business should be one year old and revenue should be more than $100,000 in last 12 months. • Factoring 2.0 is different from loan. Here funding mainly depend on customer invoice with fast approval and minimal paperwork. • It is one of the easy financing options for small business owners.
What is International Factoring Transaction • It is one type of invoice factoring and it is conformity between company and factor . Here factor buys trade debts. • Factor provides different kind of services such as collection of debts, financing, sales ledger maintenance, and security against credit risk . • International Factoring comes in different forms, depending on company’ needs and how much they can pay. • Europe and North America is most advanced in international factoring transaction.
Contd.. • There are different type of international factoring transaction i.e. Single factoring system, direct export factoring system, two factoring, direct import factoring, and back to back factoring are five options.
Steps to International Factoring • The company exports the collateral signs, an agreement with the factor which labels all the products to the factor. • The factor choose another company to which they assign the product. This will allow the importer to import the product into the country . • In meantime, the importer runs the credit of the person buying the product and establishes a line of credit. • After everything has been finished, the original factor will increase a percent of the invoice's value to the original company; usually this goes up to 80%.
Contd.. • Now the importer will have the full value of the invoice and will pay the factor his funds, enabling them to pay the exporter.
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