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How Export Factoring Can Improve Your Business?

Sophia Wilson
How Export Factoring Can Improve Your Business?

Export factoring is a financial technique in which a financial organisation purchases the receivables from the exporter, and the payment is done to the receiving authority. Then the importer does the payment to the financial organisation instead of the exporter. The concept of factoring is popular among traders who use this financial instrument to enhance and scale up their business. The students who study in business schools in Sydney look for assignment help in Sydney to complete their academic projects.

How is factoring different from a Loan?

As factoring is a relatively new concept, there is a requirement to spread awareness about factoring to exporters. When they have introduced the concept of factoring, they often confuse it with the loan; here is how factoring is different from a loan:

  • Unlike a loan, most factoring companies  don't ask for collateral 
  • The procedure of the exchange of money in favour of receivable is faster and requires lesser  due diligence
  • Once the receivables are sold to the company, the exporter does not need to worry about paying back the payment amount

Types of Factoring

Factoring services are provided to traders, exporters and importers based on their needs and requirements. 

Here are different types of factoring services:

  • Recourse Factoring:

In this factoring, around 80% of the total amount is paid by the financial companies in favour of receivables, the interest is charged from the date of export

  • Non-Recourse Factoring 

In this factoring, the factoring company is responsible for the debt loss if the amount is not received in exchange for receivables.

  • Maturity factoring 

In this factoring, the client pays to the factor only after the maturity date mentioned in the invoice.

Bill discounting 

Bill discounting is one of the rival financial products which the exporter, importer or trader can choose instead of factoring. Banks use this financial instrument to compete with factoring companies. The company's unpaid invoices are sold to the banks in bill discounting. The amount sold to the bank is a discounted amount, and the rest of the amount needs to be arranged by the exporter from their book. 

Why do students look for assignment writing help in Sydney?

Financial students who study export finance need to be aware of factoring and bill discounting principles. They often need to complete lengthy assignments to complete the due diligence process, including studying lengthy balance sheets and invoice statements. Students who study in business schools in Australia look for the assistance of assignment help service providers in Sydney. With the assistance of the assignment help online students get good grades on their academic projects.

Sophia Wilson
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