Factoring is a business based on accounts receivable. In addition to the right of recourse to the applicant in the factoring business, the factoring company may also have the right of recourse to the debtor of accounts receivable according to the provisions of Article 79 of the Contract Law after notifying the transfer of accounts receivable. The basis of recourse of current loans to debtors of accounts receivable lies in the right of subrogation in civil law, and the legal basis and applicable conditions are completely different.
Therefore, factoring financing and working capital loans are actually different. Working capital loans only need to provide financing, while factoring business is stipulated by the system. Factoring business is engaged in factoring financing, accounts receivable management, collection and bad debt guarantee.
This means that the factor plays at least two or more functions when carrying out factoring business, so the theoretical result is different from that of current loans. However, at present, factoring pays more attention to financing than management, and other functions of factoring are rarely played. On the contrary, bringing factoring to the factoring industry and market is a big misunderstanding of loans.
It should be noted that it is necessary to strengthen the understanding of the difference between factoring and loans, and the simple and rude view that factoring is a loan cannot be circulated in the industry. In the long run, it will not only bring misunderstanding to the daily operation of factoring practitioners, but also bring misunderstanding to the regulatory authorities and legislators.
If factoring is a loan, then the regulatory authorities can't do it directly with the most assured banks, or they can do it with small loan companies that are basically registered. Why cultivate an alienated "factoring market"?