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International Factoring |
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International Factoring |
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Characteristics of Factorable Exports
Export Receivables that can be factored should have the following
characteristics:
- Buyer's country should be acceptable to GTF.
- The exporter's performance obligations should be completed at the time the exporter presents an invoice for prepayment. Performance under turnkey contracts involving execution or commissioning of equipment is usually not factorable.
- There should be multiple shipments or a continuous sales flow on an ongoing basis with the same buyer or buyer(s).
- LC's are not required
- Factoring transactions necessarily require credit terms and are best suited for credit periods of upto 120 days. However, factoring transactions can also be structured for credit sales for upto 180 days.
- Factoring facilities are typically provided for "open account" transactions and can also be structured for transactions involving negotiable instruments such as bills of exchange or promissory notes, on a case to case basis.
- Factoring necessarily requires the assignment of whole turnover with a buyer. Hence, all credit sales to a buyer have to be assigned to GTF on a continuous basis once the factoring arrangement is in place.
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