[Latest News][6]

Affiliate Marketing Guides
Agriculture Business Ideas
Amazon Online Store Tips
Banking & Finance Tips
Blogging & Webmaster Guides
Bulk SMS Short Code Guides
Computer & IT Business Ideas
Education Business Ideas
Entrepreneurship Tips & Freebies
Facebook Autopilot & Tips
Fashion & Decoration Ideas
Financial Calculators
Fiverr Income Guides
Free SMS Text Messages
Google Adsense Tips
Health Business Opportunities
Inspirational Poems & Literature
Insurance & Risk Management
Job Search Tips
Mobile Phone Tips & Business
Motivational Quotes & Tips
Oil & Gas Business Ideas
Online Business Guides
Online Importation Business Guides
Small Scale Business Ideas
Social Media Income Guides
Start-Up Business Ideas
Transportation & Haulage Ideas
Web & Graphic Designing Ideas
Work-At-Home Business Ideas

Facts And Myths About Factoring

Facts And Myths About Factoring:

(1). MYTH: Factoring is nothing but bill discounting or bill finance.

FACT: Factoring and bill discounting are two different products tailored for two different markets. Factoring is meant for “Open account sales” and caters largely to a buyer’s market. Bill discounting is normally prevalent in a seller’s market. Factoring unlike bill discounting offers a continuous relationship.

(2). MYTH: Factoring reduces bankers business.

FACT: Factoring is not merely financing and includes a package of services like collection and follow-up of each invoice, credit insurance. MIS support etc., and improves the health of bank’s clients, improves cash flow through factoring, increases production cycles and need for more working capital. Factoring essentially aims at replacing high cost market credit and not necessarily reduce bank finance.

finance
[Post Image Courtesy of JK1991 at FreeDigitalPhotos.net]

(3). MYTH: Factoring is an high cost borrowing.

FACT: Factoring is Comparable to interest rates of banks. (SSI – 13.50% to 15.75% Non-SSI 13.50% to 17.25%) Will to offer SBI’s PLR selectively)

(4). MYTH: Factoring service charge is high.

FACT: Service Charge is 0.1% to 0.3% only whereas in Bills discounting, the collection charge is 0.5% to 0.6%.

(5). MYTH: Factoring is meant for manufacturing units only

FACT: Factoring is Extended to all sectors namely Manufacturing, Trading and Services.

(6). MYTH: Factoring limits falls within MBBF/ Assessed Bank finance.

FACT: Factoring is to be classified as other Current liability as per RBI guidelines and Factoring replaces market credit and not bank borrowings.


About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

No comments:

Post a Comment

Do you have any reasonable comments for this post ? Please feel free to drop them below using the comment box. We will moderate and publish them as soon as possible. Cheers !

Start typing and press Enter to search