A globalized world
needs global solutions
About Premier Global F.
About Internat. Factoring
Inter. Project Financing
Factoring is a service that covers the financing and collection of account receivables in international trade. It is an ongoing arrangement between the client and Factor, where invoices raised on open account sales of goods and services are regularly assigned to "the Factor" for financing, collection and sales ledger administration. The buyer and the seller usually have long term relationships. The client sells invoiced receivables at a discount to the factor to raise finance for working capital requirement. The factor may or may not accept the incumbent credit risk. Factoring enables companies to sell their outstanding book debts for cash.
The factor operates by buying from the selling company their invoiced debts. These are purchased, usually with credit protection, by the factor who then will be responsible for all credit control, collection and sales accounting work. Thus the management of the company may concentrate on production and sales and need not concern itself with non-profitable control and sales accounting matters.
By obtaining payment of the invoices immediately from the factor, usually up to 80% of their value the company's cash flow is improved. The factor charges service fees that vary with interest rates in force in the money market. The balance (20%) is collected through the factor in the importer's country and transferred to the exporter in the due date. For many companies, selling in an international market place is the ultimate challenge. While the rewards can be substantial, success can also bring its share of problems. Different customs, currency systems, laws and languages still create barriers to trade in a world where sophisticated computer technology allows orders abroad to be placed within seconds.
One of the greatest problems facing exporters is the increasing insistence by importers that trade be conducted on open account terms. This often means that payment is received many weeks or even months after delivery. Unsurprisingly, many organisations find that giving buyers credit in this way can cause severe cash flow problems. Further problems can arise if the importer delays payment beyond originally agreed terms or makes no payment at all because of financial failure.
WHAT IS INTERNATIONAL FACTORING?
A Globalized world needs
The role of the factor is to collect money owed from abroad by approaching importers in their own country, in their own language and in the locally accepted manner. As a result, distances and cultural differences cease to be a problem. A factor can also provide exporters with 100% protection against the importer's inability to pay. The advantages of export factoring have proved to be very attractive to international traders. It is now seen as an excellent alternative to other forms of trade finance and the role of the letter of credit is gradually diminishing as a consequence.
PREMIER GLOBAL FINANCIAL offers a complete financial package in international factoring for our clients around the world. We are specialized in companies in developing countries which are exporting or importing to or from industrial countries.