What is the basic connotation of factoring businessThe so-called factoring business means that factoring business is a comprehensive financial service integrating accounts receivable collection, management, bad debt guarantee and financing on the premise that the creditor assigns its accounts receivable. The seller assigns its accounts receivable arising from the sale of goods, provision of services or other reasons to the purchaser to the bank, which provides the seller with accounts receivable financing and comprehensive financial services of commercial credit investigation and accounts receivable management. In essence, it is a loan issued for the enterprise's uncollected payment for goods, and the source of repayment is the payment for goods to be collected by the enterprise in the future. The main problems of factoring business at present (a) The laws and regulations of domestic factoring business and credit system are not yet sound, which increases the risk of banks. On the one hand, the CBRC canceled the approval procedure for domestic commercial banks to start domestic factoring business in 2003, but relevant departmental regulations have not yet been issued. On the other hand, China's enterprise credit system is not yet perfect, banks do not understand the sellers and buyers to carry out factoring business, the risk is very high. (ii) Banks use factoring business to adjust deposit and handling fee targets. (iii) The internal control system is not sound, the supervision is not in place, and a large number of domestic factoring financing without trade background exists. At present, there is no uniform regulation on factoring business and banks lack relevant internal systems. Audit Points (i) Strengthen the review of the internal control system. First, we should review whether the factoring business is managed according to the loan, and whether the business operation strictly implements the loan "three check" system. Secondly, we should review whether the bank has strict regulations on the selection of export factor in buyout factoring and double factoring, and whether there are relevant regulations on the recognition standard of accounts receivable. Thirdly, we should review whether the factoring contract and the sale and purchase agreement have set up a full-time post of regulations and whether there is a strict control system for the legal risks brought about by contractual defects. (ii) focus on the review of the bank rating credit information. First, review whether the bank strictly in accordance with the rating credit procedures to determine the amount of enterprise factoring credit, there is no arbitrarily adjust the amount of factoring credit situation, there are loans, bankers acceptances and factoring business and other comprehensive credit related information to focus on the audit. Secondly, we should review and analyze the accounts receivable, sales revenue and factoring financing accounts in the enterprise statements, and review the authenticity of the information in the "credit investigation form" and "customer survey feedback form". (C) strengthen the review of the authenticity of the trade background. First, we should investigate and understand the background of the factoring business of the bank, review and analyze the business volume in different periods and the indicators issued by the higher-level bank, and determine whether there is a large amount of factoring financing without trade background. Second, we should strengthen the review of the sale contract. Focus on reviewing whether the name, quantity and amount of the subject matter of the contract are consistent with the size of the enterprise and the relevant data in the statement; and reviewing whether there is any contradiction between the date of shipment, the date of the road waybill, the date of the bill of lading, the date of the contract signing and the date of the invoice in the factoring file. Third, strictly review the VAT invoices. Extend the review of the VAT invoice system of the State Administration of Taxation and examine whether the VAT invoices provided by the enterprises are first-opened and then canceled or first-opened and then flushed as well as invoices issued by the subsidiaries within the group companies to each other without trade background. Fourth, review the destination of seller financing. The main review of factoring financing is whether it is used for business operations, whether it flows into real estate, the stock market or transferred to the buyer's account for the return of the bank's last period of factoring. If your situation is more complex, the network also provides lawyers online consulting services, you are welcome to legal advice.
Legal Objective:(a) Recourse factoring and non-recourse factoring Recourse factoring refers to the supplier will be the accounts receivable claim assignment bank (i.e., the factor), the supplier in the payment, if the purchaser refuses to pay or inability to pay, the factor has the right to recourse to the supplier to repay the prepaid monetary funds. Currently, banks usually provide recourse factoring to their customers due to the principle of prudence and in order to minimize possible losses in the future. Non-recourse factoring, on the contrary, is where the factor alone bears the risk of the purchaser's refusal or inability to pay. The supplier is transferring the entire risk to the bank after conducting factoring business with the factor. Because the risk is too large, banks generally do not accept. (ii) explicit and implicit factoring explicit factoring and implicit factoring is according to whether the factoring business will notify the buyer to distinguish. Explicit factoring means that the supplier should immediately inform the purchaser of the factoring at the time of the assignment of the claim, and instruct the purchaser to pay the purchase price directly to the factor. While the dark factoring is the buyer excluded from the factoring business, by the bank and the supplier to carry out the factoring business alone, after the expiration of the supplier to call for the payment of the money, and then handed over to the factor after the recovery. The supplier can conceal its poor financial situation by carrying out dark factoring. It should be noted that, in China's "Contract Law" has clear provisions, the supplier in its own accounts receivable transfer, shall be agreed in the purchase and sale contract, and must notify the buyer. Therefore, this determines the factoring business carried out by banks in the country at present are explicit factoring. (C) discount factoring and maturity factoring discount factoring is also known as financing factoring, is that when the exporter will represent the accounts receivable notes to the factor, the factor immediately to the exporter in the form of prepayment to provide no more than 80% of the accounts receivable financing, the remaining 20% of the accounts receivable to be the factor to collect the full payment of the goods to the debtor (importer), and then liquidated. This is the more typical way of factoring. Factoring at maturity means that the factor does not provide financing to the exporter when it receives the documents submitted by the exporter, such as sales invoices representing accounts receivable, but pays the exporter for the goods when the documents are due. The factor must pay for the goods whether or not the payment is received at that time.