Export factoring is one of the types of international and is a complex of services that are associated with the financing of export deliveries of products. Its main feature is that the supplier and the buyer are in different countries.
The relations between the parties in export factoring are governed by the supply agreement and the interfactor agreement, which are concluded by the export factor and the import factor independently or in accordance with the requirements of the International Factoring Association, to which they are members.
To carry out export factoring operations, a direct or two-factor (reciprocal) model can be used .
In this case, the factoring company has the right to work directly with the buyer-importer. Such an export factoring scheme is mainly applicable when the exporter is geographically close to the importing country or when a deal is concluded with reliable buyers who have proven to be responsible payers.
Two-factor (reciprocal) model
In this case, export factoring involves the participation of two factoring companies from the exporting and importing countries in the transaction. A supplier in his country applies to an export factor in order to obtain financing for the supply to a foreign buyer. The factoring company asks the import factor (in the buyer’s country) for information on the buyer’s solvency and credit limit. If its solvency is confirmed, the export factor provides funds to the supplier under the terms of factoring, and then receives them from the buyer or the import factor.
The advantages of export factoring
The ability to expand the supply chain by providing competitive terms and conditions of payment, including through deferred payments.
Increase in the turnover of the exporting company, since export factoring does not involve the use of collateral.
The ability to receive funding of an unlimited and unlimited nature under the terms of factoring.
Insurance against the risk of non-payment.
Simplification and acceleration of the procedure for receiving payments when comparing export factoring with letter of credit settlement.
Possibility of professional management of accounts receivable.
Life Factoring works with representatives of Russian small and medium-sized businesses, offering complex factoring services. If you are interested in what benefits your company can get by cooperating with us, please contact your personal manager by our phones in your region.