Factoring financing means that the seller applies for the purchase by the factoring bank of the accounts receivable arising from the credit sale of goods between it and the buyer, and the seller assumes joint and several guarantee liability for the payment due by the buyer, and also assumes the liability to repurchase the accounts receivable at the request of the factoring bank.
Commercial factoring is a set of financial solutions based on a factoring contract entered into between a factor and a supplier, including financing, credit risk management, accounts receivable management and collection services. Specifically, the seller assigns the accounts receivable arising from the contract for the sale of goods (services) concluded between the seller and the buyer to the factoring company, which provides comprehensive commercial services such as trade financing, accounts receivable management and collection.
The factor accepts the supplier's accounts receivable under the factoring contract and pays the buyer instead. If the buyer is unable to pay, the factor pays the supplier. A factoring contract is a contract whereby a supplier assigns to a factor the accounts receivable (hereinafter referred to as "accounts receivable" or, depending on the context, a portion of the accounts receivable) that have been or are to be formed, whether or not for the purpose of financing, in order to fulfill one or more of the functions of accounts receivable segregation, accounts collection, and prevention of bad debts.
Establishment of working mechanism. The competent commercial department of the pilot region shall be the competent department of the commercial factoring industry. The competent authority shall strengthen communication and coordination and establish a working mechanism in conjunction with the relevant departments of Tianjin and Shanghai Municipal People's Governments and the People's Governments of Binhai New Area and Pudong New Area respectively. Strengthening access management. Investors in commercial factoring companies should have the appropriate asset size and financial strength to carry out factoring business, shall not invest in borrowed funds and funds entrusted by others, have a sound corporate governance structure and a perfect risk internal control system, and have no recent record of violation of penalties.
Applying for the establishment of a commercial factoring company shall have a registered capital appropriate to the scale of its business, and have executives with experience in the operation and management of factoring business and no bad credit record. It should establish a corresponding management system to carry out the factoring business, improve the relevant business processes and operational standards, and report the business development to the competent authorities on a regular basis. Commercial factoring is a mysterious industry with many business secrets. "Engaged in accounts receivable business, involving quite a lot of industry where all enterprises involved in trade credit sales will need factoring companies." With the development of the market, credit sales are becoming more and more common in trading, which lays a good market foundation for the development of factoring business