Single Factoring System:

  • Under this system, a special agreement is signed between two factoring companies in the exporting & importing countries to the effect that only on factoring agency would perform all the functions.
  • If the export factor is not in a position to realize the dues even after 60 days of the due date than he requests the import factor to undertake the collection responsibility
  • Simultaneously, the export factor informs the debtor about the assignment for collection is given to the Import factor.
  • The Import factor under his power can initiate the legal proceedings.
  • In case the dues still remain outstanding, then the import factor has to bear the loss.
  • The pricing under this system is much lower compared to the two-factor system
  • In this system, the import factor does not maintain any books of the exporter but acts on the information from the export factor.

Direct Export Factoring:

  • Under this system, only one factoring company is involved i.e. export factor
  • It provides all the elements of service of factoring, namely finance to exporters, maintenance of sales ledger & collection of debts from the importers, credit protection in case of financial inability on part of any importes.
  • This type of factoring is less expensive & quick.

Direct Import Factoring:

  • Under this system, the seller will directly work with the import factor in the importer’s country.
  • The import factor is responsible for sales ledger, adminstration, collection of debt & provide bad debt protection to the exporter.
  • The main disadvantage of the system is the lack of proximity between the exporter & the import factor.

 

 

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