Characteristics of factorable transactions

Domestic Receivables that can be factored should have the following characteristics:

• The seller’s performance obligations should be completed at the time the seller presents an invoice for prepayment.
• There should be multiple shipments or a continuous sales flow on an ongoing basis with the same buyer or buyer(s).
• 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.
• LC's are not required
• 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.