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.
Other knowledge of commercial factoring.
Internationally, in order to solve the credit problem when sellers lend money to foreign buyers in international trade, traditional commercial factoring came into being. Factors solve the problem of credit accounting between upstream and downstream from goods supervision, reconciliation, providing credit guarantee for buyers, and then financing for sellers.
However, it took only 10 years for factoring business to be introduced into China, and banks were the first to intervene. Bank factoring is relatively more focused on financing, and at the same time, the seller's credit status is strictly evaluated, and sufficient mortgage support is needed to occupy his credit line in the bank. Therefore, small and medium-sized commercial enterprises often fail to meet the standards, which gives commercial factoring room for survival.