Commercial factoring refers to a trade financing tool in which the supplier transfers the accounts receivable generated from the goods sales/service contract signed with the buyer to the factor, and the factor provides them with comprehensive financial services such as accounts receivable financing, accounts receivable management and collection, and credit risk management. The essence of commercial factoring is that the supplier converts the credit of the core enterprise (that is, the buyer) into his own credit based on commercial transactions to realize the financing of accounts receivable.
The difference between bank factoring and commercial factoring
At present, bank factoring pays more attention to financing, and banks still need to strictly examine the seller's credit status when handling business, and need sufficient mortgage support to occupy its credit line in the bank. Therefore, bank factoring is more suitable for large enterprises with sufficient mortgage and risk tolerance, and small and medium-sized commercial enterprises usually fail to meet the standards of banks. Commercial factoring institutions pay more attention to providing a series of comprehensive services such as investigation, collection, management, settlement, financing and guarantee, and focus on a certain industry or field to provide more targeted services; Pay more attention to the quality of accounts receivable, the buyer's reputation and the quality of goods. , rather than the qualification of the seller, truly realize the complete transfer of unsecured and bad debt risks. Therefore, if the creditor's rights are transferred to the factoring company in the form of commercial factoring, the accounts can be revitalized and the efficiency of cash flow can be improved. Statistics show that the average profit level of enterprises that use factoring is higher than that of enterprises that do not use factoring by more than 10%.