So let us continue talking about factoring and in these very series of articles we will find out what is the process of factoring and how it can be made and also let us find out different factoring kind.
So let us start:
Now more and more attention is given to small and average business as it is basic factors of development of national economy. The given category of business gets financial support, both from the state, and from the various credit organizations. Among all credit products given by the credit organizations, special value has factoring. And that is exactly what we are going to talk about.
The primary goal of factoring is attraction of the finance for replenishment of circulating assets of suppliers. It consists in that the supplier permits to repay indebtedness of the buyers of factoring company. For the supplier it is first of all a fast method of attraction of financial resources. As the factoring company pays off with the supplier for the goods put to the buyer and itself in a consequence collects from the buyer indebtedness.
Factoring process includes some stages. The basic distinctive feature of transactions and rendering of services at factoring is a payment adjourning. Before the seller will produce goods shipment, he concludes the agreement of factoring with the company approaching to it and reports about it to the buyer. After that it gives to the buyer requisites necessary for the subsequent debt settlement. After shipment of goods the seller directs the documents confirming shipment of the goods to the seller to factoring company. After that the supplier receives from factoring company percent from cost of shipped goods which is established in the agreement. The buyer lists money funds of factoring company as payment of goods shipped to it. After the buyer completely repays the indebtedness, the factoring company definitively settles payments with the supplier. For the services factoring companies levy the certain commissions.
The sum which is paid to the seller after shipment of the goods depends on various factors: a sum of transaction, the expected period of a payment adjourning, and also degree of risks. The sum of initial payment can constitute from 50 % to 90 % from a sum of transaction.
Also let us find out how the factoring can be subdivided and what the factoring kinds are, but we will talk about it in the second part of these series of articles. So if you are interested in this subject just keep reading the second part.
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