What Is Accounts Receivable Factoring?

Accounts receivable factoring is the transfer of unexpired accounts receivable formed by credit sales to commercial banks under certain conditions to obtain bank liquidity support and speed up capital turnover. In theory, factoring can be divided into buyout factoring (non-repurchase factoring) and non-buyout factoring (repurchase factoring), recourse factoring and non-recourse factoring. , Explicit factoring and implicit factoring, discount factoring and maturity factoring.

Accounts receivable factoring

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Accounts receivable factoring

With the development of the market economy and the general promotion and application of commercial credit, factoring business has increasingly become a collection of trade financing and commercial credit

Accounts receivable factoring

(1) Low-cost financing to speed up capital turnover.

The cost of factoring is significantly lower than the cost of short-term bank loans

The factoring business originated in North America and Europe in the 19th century, and officially landed in China in October 1987

(I) Increase the publicity of factoring business and give full play to the advantages of factoring business

Bank of China only provides a single settlement service for factoring business between enterprises, in fact it cannot play the role of the core of the economy. Domestic banks should change

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Management concept, gradually establish the concept of risk management, and carry out scientific decision-making and positioning. Moreover, due to long-term restrictions on traditional transaction models such as remittances, collections, and letters of credit, Chinese companies, especially import and export companies, have not been able to adapt to factoring businesses based on commercial credit. Therefore, all parties should strengthen publicity efforts and start Enterprise training courses, on-site publicity and explanation, implementation of trial period trial preferential rates and other means, so that more companies understand factoring business, choose factoring business, in order to give full play to the advantages of factoring business, and make factoring business a new type of financing Tools to better serve the business.

(2) Establish and improve laws and regulations on factoring business, and promote the development of factoring business

The market economy is a legal economy. The behavior of various market players needs to be regulated by laws and regulations. The rights and obligations between market players cannot be separated from the regulation of laws and regulations. China's factoring legislation is still blank and lacks rigorous operating procedures to guide practice, which greatly affects the enthusiasm of banks in conducting factoring business, and also restricts foreign experienced factorers from entering the domestic market. Therefore, on the one hand, relevant Chinese departments should learn from existing international conventions and international practices, and absorb the developed country's case law and experience on factoring, and establish a complete set of legal systems for factoring in accordance with China's national conditions. Business operation procedures to promote the construction of relevant laws and regulations in China's factoring business; at the same time, it is necessary to formulate, revise or improve relevant laws and regulations including financial regulations, bank payment and settlement methods and guarantee laws, and accounting regulations as soon as possible; Factoring and its conflict of rights with third parties, specific solutions to the debtor's defense and counterclaim, liquidation and bankruptcy, etc., in order to standardize the operation of factoring business, form a fair competition mechanism, and make China's factoring business legally Development and protection.

(3) Broadening the scope of factoring business, using dual factoring and non-recourse factoring business

The factoring mode generally includes single factoring and dual factoring, and the double factoring is used internationally. However, because China's credit system is still not perfect, for the purpose of preventing bank risks, most commercial banks in China use single factoring mode, that is, export factoring and maturity factoring. However, from the perspective of the factoring business operation model, double factoring And the factoring model without recourse has advantages over the single factoring model. In this case, we should actively broaden the scope of factoring business, on the one hand, develop dual factoring, and let the exporter's factoring agent and the importing country's factoring agent establish a close cooperative relationship. The other is to develop factoring business without recourse.

(IV) Strengthen the construction of credit system, and pay attention to the methods and resolution of credit risk

Any financial innovation should put prevention of business risks first. In China, the imperfect credit mechanism is still one of the main reasons restricting the development of factoring business. Establishing a socialized corporate credit system as soon as possible, and providing an efficient, fast, and authoritative corporate credit inquiry system for factoring business, are important issues facing the current development of factoring business. In factoring business, especially in non-recourse factoring business, banks have to assume greater risks because they have lost their recourse to sales. Therefore, factoring companies must establish a relatively comprehensive credit investigation network in order to Buyers have a strong grasp of credit risk.

(5) Actively train high-quality factoring personnel and improve the efficiency of factoring business

The characteristics of factoring business determine that factoring business personnel must not only have a high level of foreign language and professional factoring knowledge, but also have commercial trade knowledge and strong comprehensive financial analysis capabilities. At the same time, they must have legal common sense and fully understand Conventions and regulations, know how to formulate a set of practical and trustworthy measures to reduce their own risks. Therefore, commercial banks should create a good environment and conditions, pay close attention to the professional training of factoring business personnel, establish a professional team of factoring and credit evaluation with good professional ethics and professionalism, and grasp the latest developments in factoring business. Further improve the level of business operations and keep up with the latest developments in international factoring business.