0. Operational Aspects of Factoring
India Factoring & Finance Solutions Pvt Ltd
Operational Aspects of Factoring
Global Factoring Summit – 5th May 2017
Ganesh Nalawade
Chief Operating Officer

1. (Factoring Company in Buyer’s Country)
Export Factoring Non-Recourse – Transaction Flow
Our Client
Exporter
Client’s Buyer
In Foreign Country
1. Ships Goods on Credit Terms
6. Follow up
7. Payment on Due Date
2. Submits Invoice + Shipping Docs
4. Pays 90% immediately
3. Sends Documents
9. Pays balance 10%
5. Informs Invoice details
8. Remits money received or Pays on PUG date
Our Correspondent
(Factoring Company in Buyer’s Country)
India Factoring
Follows up with Buyer and Collects dues
Covers the Buyer’s Risk (Pay us in case of default)
Credit Management (Keeps updated on Buyer’s credit standing)
We Finance
We Manage Client’s whole ledger

2. (Factoring Company in Buyer’s Country)
Limit Setup
Exporter
Client’s Buyer
In Foreign Country
India Factoring
Our Correspondent
(Factoring Company in Buyer’s Country)
Client’s Buyer
In Foreign Country
Debtor Limit Setup
Buyer’s creditworthiness
Based on your sales & agreed tenor
Not Balance Sheet
Sales Limits
Client Limits
Sum of Debtor limits * 90%

3. Correspondent Factor FCI Members (90 countries with 400 + members)
Exporter
Client’s Buyer
In Foreign Country
India Factoring
Our Correspondent
(Factoring Company in Buyer’s Country)
Our Correspondent
(Factoring Company in Buyer’s Country)
FCI Members (90 countries with members)
Local knowledge about buyer
No separate Credit Insurance required
Coverage of upto 100% of Invoice
No Bills of Exchange required
Consignee need not be Bank
Collection (Language & Time Zone issues solved)
Credit Protection
Credit Management – Early Warning Signals

4. (Factoring Company in Buyer’s Country)
Export Factor
Exporter
Client’s Buyer
In Foreign Country
India Factoring
Our Correspondent
(Factoring Company in Buyer’s Country)
India Factoring
Funding on Shipment (no BoE/acceptance required)
Prepayment upto 90%
Interest – Monthly on the funds drawn
Credit Cover on Incoterms
All regulatory obligations serviced
GR/SB  Authorised Dealer
EDPMS
BRC
FIRC
CERSAI

5. (Factoring Company in Buyer’s Country)
Exporter
Exporter
Client’s Buyer
In Foreign Country
India Factoring
Our Correspondent
(Factoring Company in Buyer’s Country)
Client - Exporter
Cash Flow issues solved
Funding on Shipment (no BoE/acceptance required)
Limits based on Turnover to Debtor, not on B/S strength
Self liquidating facility
Unsecured facility
Off Balance Sheet
Credit Cover on Incoterms
Collection Services (language & time zone issues solved)
No Penal Interest for overdues
Credit Protection upto 100%
Credit Management – Early Warning Signals
Just focus on your business

6. Factoring vs Bank Finance
Receivables are Assigned / Purchased
Factoring Limit - Off Balance Sheet (Non-Recourse)
Unsecured
Receivables get converted into Cash
Factoring Limit is based on future Sales
Factoring is based on Client’s performance of goods and Debtor’s Creditworthiness
Collection Services
No Penalty on Overdues
Buyer Concentration approach
Bank Finance
Receivables are Hypothecated
Bank Limit reflects on Balance Sheet as Loan
Mostly Secured
Receivables remain as Debtors
Bank Limit is based on Balance Sheet
Banking Limit is based on Client’s Creditworthiness
No Collection Services provided
Penal Interest on Overdues
Client Concentration approach

7. Thank You India Factoring & Finance Solutions Pvt Ltd
Global Factoring Summit – 5th May 2017
Ganesh Nalawade
Chief Operating Officer