Simply put, commercial factoring means that the seller sells the goods to the buyer, and the seller can transfer the accounts receivable arising from sales or contracts in the course of trade to the factoring company, and then the factoring company provides the cash flow for the seller's purchase and production in advance, thus avoiding the problem of enterprise capital turnover during the period from the generation of accounts receivable to the recovery.
What's the difference between financial leasing and commercial factoring?
1. Rights. Financial leasing is based on the property rights of equipment and the creditor's rights arising from leasing, while commercial factoring is only based on the creditor's rights financing arising from credit sales trade.
2. The degree of risk. Financial leasing is based on property rights and creditor's rights, while commercial factoring is only based on creditor's rights financing under trade, so the risk of financial leasing is lower than that of commercial factoring.
3. The source of credit risk. The credit risk of financial lease debt mainly comes from the lessee. The main sources of credit risk of commercial factoring debt are buyers and sellers.
4. Customer financing amount. Because most financial leasing is mainly based on large-scale equipment, the amount is generally relatively large. Most commercial factoring is small, frequent, urgent and fast, and generally the amount of financing for customers is relatively small.
5. Financing cost. Financial leasing generally provides financial leasing services at a relatively low cost. Because commercial factoring is credit financing and based on small and micro enterprises, the cost is relatively high.
6. Scope of service. Financial leasing generally provides services such as equipment financial leasing, equipment maintenance and equipment residual value processing. Commercial factoring generally provides services such as trade financing, credit guarantee, accounts receivable management and collection.
Financial leasing companies are divided into domestic, foreign and Sino-foreign joint ventures. Today, Bian Xiao, a businessman from Henan Province, focuses on the conditions for establishing a Sino-foreign joint venture financial leasing company:
1. The investor applying for the establishment of a financial leasing company must be an enterprise or other economic organization with good credit, no major violations of laws and regulations in the last three years, and no major bad credit records;
2. The investor applying for the establishment of a financial leasing company should have been established 1 year. Eligible investors invest in the establishment of a financial leasing company in the name of its wholly-owned subsidiary (SPV), and the relevant subsidiaries may not be required to survive for one year;
3. China investors are in good financial condition and have been making profits continuously in the last two fiscal years; The foreign investor or its overseas parent company has been legally registered overseas and engaged in substantive business activities, and the total assets of the foreign investor are not less than $6,543,800,000;
4. The registered capital of the financial leasing company to be established is generally not less than 500 million yuan (or equivalent foreign currency), and there is a clear paid-in capital contribution plan. Under normal circumstances, foreign-funded financial leasing companies should pay part of their registered capital in place within 6 months after their establishment to ensure the substantial development of financial leasing, commercial factoring and other related businesses; The remaining registered capital should also be paid in full in time according to the business development;
5. The capital invested by investors is in their own currency, and the source of funds is true and legal. Do not use bank loans, funds entrusted by others and other debt funds and other non-owned funds to become shareholders;
6. The financial leasing company to be established has a clear development strategy and a clear profit and risk control model;
7. The proposed financial leasing company has formulated and improved its articles of association and major internal control systems such as financial management and risk control;
8. The directors, supervisors and managers to be appointed have good credit, no major violations of laws or regulations or bad business records, and no major bad credit records in the past three years; The general manager and deputy general manager to be appointed, the heads of risk control, compliance audit and financial management departments (or persons who actually perform relevant duties) and other management personnel shall be familiar with economic and financial work, have been engaged in financial leasing (leasing) business or related financial institutions for more than three years, or have been engaged in related industries for more than five years;
9. The financial leasing company to be established has an actual business place at its place of registration (if it is registered in the Pilot Free Trade Zone, it shall at least set up an actual business place in the area where it is registered);
10. Complete application materials shall be submitted, and the submitted materials shall be guaranteed to be true, accurate, complete, legal and effective.
Due to policy factors, the establishment of new companies in the national financial industry is basically suspended, and commercial factoring and financial leasing are also among them. At present, companies that want to obtain financial leasing and commercial factoring are best to purchase or transfer between existing companies.