Factoring Services - Receivables Funding

Product Description

Introduction to HSBC Factoring Services Factoring is a continuing relationship between the Factor (HSBC Factoring Services) and a business concern (the Client) selling goods and/or providing services to its customers on open account basis. The factor purchases the client’s book debts with/without credit protection and extends finance besides administering the sales ledger. The following services are offered by HSBC Factoring Services (HFS): 1. Maintenance of client’s Sales Ledger 2. Collection of Account Receivables 3. Credit Control and Credit protection 4. Financing of Receivables 5. Advisory services HSBC offers both domestic and international factoring products.  HFS ascertains the suitability of a client’s business for Factoring  Client enters into a Factoring arrangement with HFS by signing a ‘Factoring Agreement’  Based on the requirement of the client’s business, HFS fixes a limit for purchase of receivables from various customers and allows Prepayment up to *5% of the invoice value.  Once a Factoring Agreement is in place, all original invoices raised by the client on its customers must contain a notification of assignment clause, giving a notice to the customers that the debt under the invoice has been purchased by the factor and also authorizing him to make payment directly to the factor whose receipt alone shall be valid discharge.  HFS follows up with the customer for getting payments from the customers on the due date.  Where credit protection has been offered, ultimate risk is borne by the Factor, otherwise the ultimate risk in the case of non-payment by the customer is to the client’s account. HFS provides comprehensive MIS to the client/customer on a regular basis Benefits of Factoring for Companies  Factoring provides value added services like Sales Ledger Management, Collections & Credit Protection.  No Collateral Security requirements in Factoring.  Factoring allows SME’s to sell on Open Account Terms.  Factoring is flexible and permits clients to modify their funding requirements.  Factoring is an innovative product with flexible structuring and offers more than traditional working capital finance.  Factoring is an off balance sheet item.