International factoring (factoring export)
Transfer of export receivables to a factor to obtain immediate financing and protection against the risk of non-payment.
International factoring (Export Factoring)
International factoring is a financial service by which an exporter assigns its trade receivables to a factor (factoring company) in exchange for immediate payment, generally 80 to 95% of the invoice amount.
Services included
- Financing: early payment of receivables without waiting for the payment term
- Guarantee: protection against the risk of non-payment by the foreign buyer (in factoring without recourse)
- Management of accounts receivable: monitoring of collections, reminders, recovery
Two-point system
In international trade, the two-factor system is common: the export factor (in the seller's country) and the import factor (in the buyer's country) cooperate via the FCI (Factors Chain International) network.
Difference with flat rate
Factoring concerns short-term receivables (30 to 180 days), forfaiting concerns medium and long-term receivables (6 months to 7 years), generally materialized by endorsed drafts or promissory notes.
Cost
The factoring commission includes a service commission (0.5 to 2% of the turnover transferred) and a financing rate (monetary rate + margin).
Target audience
Particularly suitable for exporting SMEs with cash flow needs and selling on credit to international buyers.